Quote:
Originally Posted by OldShooter
As I mentioned in Post #3 I am not familiar with the tax treatment of zeros and stripped bonds. So now I understand that interest on zeros is taxes basically on a accrual basis. How about strips? Also on an accrual basis or all at the end?
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The same.
In both cases, you are issued a 1099-OID (Original Issue Discount) annually. I happen to know this because my grandmother bought one of my kids a zero and one a strips, with me or DW as custodian. Both types of bond involved getting the 1099-OID every year. I always put it as a nominee distribution, and they didn't need to file, so it turned out to be tax-free growth for them, but that wouldn't be the case, of course, for someone trying to limit AGI.