Inherited Savings Bonds.

[OtisMozzetti]

I am not sure there is any disagreement

...However. am I right in sensing disagreement on whether and to what extent is is ok to change between pay as accrues and pay at the end and what impact does your choice with this bond have on your choice with other bonds you own? ...

I don't see anyone who disagrees that it is ok to change between pay as it accrues and pay at the end. There is now known to be a provision in Rev. Procedure 2002-9 which states that you cannot move from pay as it accrues to pay at the end if you already did that same thing within the previous 5 years. The impact your choice has with other (savings) bonds you own is easy to understand because the same choice applies to all savings bonds which are owned.

[Lion]

Planning

This is a great planning tool for the young child who received bonds as gifts from relatives. Report each year when they have no other income and no tax due, or even very little tax due. Then, when they're likely to be making some earned income and also likely to be cashing in some bonds for college, the tax hit is minimal since they were reporting all their lives and have just the current year interest to add to their other income now.