Page 49 - Interest Income - Individuals

Savings Bond Traded

 If you postponed reporting the interest on

your Series EE or Series E bonds, you didn't
recognize taxable income when you traded
the bonds for Series HH or Series H bonds,
unless you received cash in the trade. (You
can't trade Series I bonds for Series HH
bonds. After August 31, 2004, you can't
trade any other series of bonds for Series
HH bonds.)

 Any cash you received is income up to the
amount of the interest earned on the
bonds traded.
 When your Series HH or Series H bonds
mature, or if you dispose of them before
Savings Bond maturity, you report as interest the

difference between their redemption value
and your cost.
 Your cost is the sum of the amount you paid
for the traded Series EE or Series E bonds
plus any amount you had to pay at the time

of the trade. 47