Legal Question in Tax Law in California

taxability of gifts or inheritance

Years ago my brother made me co-owner of certain of his US savings bonds, intending to leave them to me upon his death. Recently, upon being diagnosed with Alzheimers, he decided to give the bonds to me now. As co-owner, I have cashed the bonds. Is either or both the purchase price my brother paid for the bonds or the interest accrued taxable to me on my Federal or California tax return?


Asked on 4/14/08, 12:37 pm

1 Answer from Attorneys
Jeb Burton The Burton Law Firm

Re: taxability of gifts or inheritance

If your brother gifted you the savings bonds, and they were over 12,000 dollars in value, then he needs to file a gift tax return for the gift.

With regards to income, you should take the savings bonds at the basis in which your brother paid for them. Meaning that (depending on the savings bonds series) you will owe taxes on the difference between the price paid and the price you cashed them in at. Who you owe taxes to and what type of tax you owe (capital gains vs. ordinary income) depends on the type of bond that you cashed in. Speak to a CPA for that exact information.

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Answered on 4/14/08, 12:45 pm


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