A questions for the tax experts

Discussion in 'After Hours Lounge (Off Topic)' started by Mark Paquette, Jan 30, 2005.

  1. Mark Paquette

    Mark Paquette Supporting Actor

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    I was gathering all the necessary paperwork to complete my taxes this weekend. One of the forms I received from my bank was a 1099-INT for an EE Savings Bond that I cashed back in April. This was a $1,000 bond that was purchased for me by my grandparents way back when. When I cashed it in, it was worth about $1,300. So my question is about the reportable interest. Should I be paying taxes on entire sale price of bond ($1,300), which is what the bank is reporting to the IRS. Or the amount that the bond increased in value, in this case about $800 ($500 purchase price, $1,300 value when cashed).
     
  2. Scott Merryfield

    Scott Merryfield Executive Producer

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    I would think that you would only owe taxes on the interest earned. The initial bond purchase price would be considered a gift from a family member, and you are allowed to receive these gifts tax-free (up to a specified amount, but certainly more than the $500 purchase price of the bond).
     
  3. SethH

    SethH Cinematographer

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    You only pay taxes on the interest.



    The amount is $10,000 per year.
     
  4. Mark Paquette

    Mark Paquette Supporting Actor

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    Thanks guys.
     
  5. Michael Reuben

    Michael Reuben Studio Mogul

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    It's now $11,000. The increase kicked in a few years ago.

    M.
     

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