Series HH bonds with a deferred tax of $38500 redeemed by estate of owner in
2008 deceased in 2007)When are taxes due, on what form (1041 or 1040) and, if the funds are distributed to heirs of estate, is it taxable to them rather then deceased or estate. (Heirs in lower tax bracket).
Form 1041. Yes - via 1041 Schedule K-1. However, note that the 1099-INT is likely to impute the interest since purchase and there is a valuation step-up so there may also be an estate tax deduction passed through for the IRD.
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