Bond Interest for deceased

That depends on whether the bonds were amortized or not.

My understanding is that the trust needs to pay the tax. This is done on form 1041. The table on page on page 27 of the instructions has the rates. The rates are high, and the exemption of $600 is small.

You might need an expert to handle this thing.

Tangentially, just because the bonds say "survivor put options" does not mean you will be able to put them. Often the bond issuer sets aside only a limited amount of funds to cover these puts, and when those funds are used up, you cannot put the bonds.

If they are successfully put, or sold, there is a capital gain. The amortization election affects this gain.

What I am wondering is if there's a step-up in basis possible.

Steve

Wouldn't they be worth par as of the alternative (6 months after death) valuation date (especially if they've been put by then)?

Seth

The alternative valuation date can only be elected (by the executor) if both the taxable value of the estate and the estate tax are lower on the alternative date.

As of one second after death, those particular bonds (having the death put) are worth par. So is the estate valued at the time of death, or at the end of that day?

Seth