What are the tax implications of reissuing savings bonds and transferring them to my son s name?
Tax-wise, you can make a mistake by having bonds reissued and placed in someone else s name. When an original bond-owner has the bonds reissued in someone else s name, the Internal Revenue Service considers the name-change a “disposition.” The IRS essentially treats a disposition as a sale, which means you will have to report all the interest the bonds have earned over the years on your tax return even though you haven t really sold them. Your son, meanwhile, will be responsible for paying taxes on the interest income the bonds generate in the future. If it s any solace, at least he ll be able to defer those taxes until he actually sells the securities — or makes the same mistake you did by having them reissued in another person s name.
