How do I record I Bonds bought through Treasury Direct

MICHAEL FIRESTEIN
MICHAEL FIRESTEIN Member ✭✭
edited September 12 in Investing (Windows)
how do I add Ibonds bought through Treasury Direct to investment list

Best Answer

  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    edited August 11 Answer ✓

    To track an I bond, you can set up an off-line Brokerage type investing account to hold all your I bonds. You can call it "Treasury Direct" or whatever you like. 

    Then go to Tools > Security List and click on Add security to create a Security for the bond. Click on the link at the bottom to enter the name manually. Leave the Ticker Symbol blank and give the bond a descriptive name like IBond 2052-08-31. Set the Security type to Other. The Bond type is for negotiable bonds, which does not apply to I bonds.

    Usually people defer I bond interest until they redeem the bond. The bond's value is increasing year by year and thus should be reflected in your net worth, but the increase should not show as taxable income.  

    In this case, go to the account you created and enter a Buy (not Bonds bought) for one “share” at the amount you paid for the bond. If you receive the bond as a gift, you would enter an Add instead.

    As interest accrues and the I bond’s value increases over the years, you can increase the bond's "share" price to match its current value. Then when you redeem the bond, you would [edit per @q_lurker's comments below] lower the price back to the purchase price  sell the bond at the original purchase price and record an Int payment for the total interest.  then record the sale . That should make Quicken's net worth and tax calculations correct.

    If you choose to pay taxes as you go, you would buy as many shares of the security you created as the amount you paid for the bond at a price of $1.00. When the bond pays interest, you record it as a ReinvInt transaction.

    QWin Premier subscription

Answers

  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    edited August 11 Answer ✓

    To track an I bond, you can set up an off-line Brokerage type investing account to hold all your I bonds. You can call it "Treasury Direct" or whatever you like. 

    Then go to Tools > Security List and click on Add security to create a Security for the bond. Click on the link at the bottom to enter the name manually. Leave the Ticker Symbol blank and give the bond a descriptive name like IBond 2052-08-31. Set the Security type to Other. The Bond type is for negotiable bonds, which does not apply to I bonds.

    Usually people defer I bond interest until they redeem the bond. The bond's value is increasing year by year and thus should be reflected in your net worth, but the increase should not show as taxable income.  

    In this case, go to the account you created and enter a Buy (not Bonds bought) for one “share” at the amount you paid for the bond. If you receive the bond as a gift, you would enter an Add instead.

    As interest accrues and the I bond’s value increases over the years, you can increase the bond's "share" price to match its current value. Then when you redeem the bond, you would [edit per @q_lurker's comments below] lower the price back to the purchase price  sell the bond at the original purchase price and record an Int payment for the total interest.  then record the sale . That should make Quicken's net worth and tax calculations correct.

    If you choose to pay taxes as you go, you would buy as many shares of the security you created as the amount you paid for the bond at a price of $1.00. When the bond pays interest, you record it as a ReinvInt transaction.

    QWin Premier subscription
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    Couple of personal (optional) tweaks to Jim's comments:
    • I prefer to assign a ticker to all securities in my Quicken file.  I find it improves my ability to extract individual price history data of each security if ever needed (rare).  For an IBond, I might use a ticker like IB-520831; something that would 'never' be used as a real ticker.  In that same context, you would want to make sure that Quicken security with that fake ticker was not set for the Download Quotes option.
    Then when you redeem the bond, you would lower the price back to the purchase price and record an Int payment for the total interest, then record the sale. 
    I am not sure that was clear, or I might go a couple of different ways with it.  For redemption and taking full interest at that time, I think Jim is saying you sell the Bond at redemption for the original purchase price (no capital gain).  You then record a second transaction as Interest Income.  Those two transactions total the full redemption value of the bond, right total cash into account.  (I see no need to separately 'lower the price' of the security; the sale transaction does that.)

    Another way to handle that is to record a reinvest income transaction before the sale, and then enter one sale for the total amount.  Example:  You bought the 1 share for $300.  Over time you accumulated $700 in interest.  At redemption, you receive $1000.  Buy 1 share for $300, reinvest $700 buying 1 more share.  Sell the 2 shares for $1000.  The Capital gains info would show a gain on the first share and a loss on the second share for a net $0.  (Number of shares bought with the reinvestment is immaterial.)  Variation:  Two Sale transactions -- Sell first share for $300 and second share for $700.  Both sales would be yield $0 capital gains. 

    Bottom line, there are often different ways to get to the same result.  

  • volvogirl
    volvogirl SuperUser ✭✭✭✭✭
    I just redeemed a whole bunch of EE bonds.   Over the years I entered the increase as Deferred Interest every 6 months or so.  I used the Savings Bonds Wizard until they discontinued it.  Then I filled out the bonds on the Treasury website in a html file.  Took a long time to enter them all.  My husband had bought a bond each month at work so there were almost 200 of them.    

    Well our health is not good and the bonds are maturing so I cashed them in.  Here is my bank deposit entry.  I added 2 entries to move the interest to income.


  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    Good idea on the steps for selling at the end, @q_lurker. I have updated my post along those lines.
    QWin Premier subscription
This discussion has been closed.