Q. I own old Savings Bonds with lots of accrued interest. I might keep them in my estate or donate them to charity. If I donate them, can I deduct the full value without paying any tax? C.K., Madison, NJ
A. No. If you donate U.S. Savings Bonds to charity, you have to pay tax on the accrued interest just as if you had cashed them in. But the IRS bases your charitable deduction on the full value of the bonds plus the interest. If you do nothing and keep the bonds in your estate, your heirs will owe tax on the accrued interest upon your death.
Tip: Donate the U.S. Savings Bonds to charity through your will. That way, no income tax is due by either you or your heirs.
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