How to reconcile an I series bond
I have seen a lot of good discussions out there on adding and tracking I Series bonds. Specifically from and . It has been very helpful! I do have one follow up question. I understand the concept of "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." But just to be specific, my assumption is that when you are doing that you are actually updating the price paid per share (found when you edit a "Bought" transaction) and not Cash Balance or Share Balance. Please confirm.
Additionally, if someone could comment on the actual process used to reconcile the I Series bonds. My assumption is that given the above there is really a need? Thanks!
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The method I use to reflect increased value of I bonds is through reinvestment. I use an arbitrary timeframe to to visit Treasury Direct to determine the current value. From there I simply use the TD value minus the Q register value to determine the reinvested interest.
Showing Price History…
Actual Reinvestment screen… The Key is to get the fractional shares to maintain a Price of 100.
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The problem with recording the interest as a reinvestment is that if you use Quicken's tax reports, they will show the interest as paid in the current year. You are allowed to report it that way, but the more common way is to defer the taxes until the bond is redeemed.
If you are deferring the taxes, I would recommend that you record the increased value of the bond by going to the bond's Security Detail page, clicking on More, choosing Edit Price History, and adding the date and the new share price. Repeating my instructions for this scenario,
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 as shown on the Treasury Direct site. You can do this by going to the Security Detail view for the bond, then click on More and Edit Price History. If you have several bonds to update, you can go to the account and click on Holdings. Next to Show: select Value. Set the correct date next to As of: and enter the values in the Quote/price column.
Then when you redeem the bond, you would lower its price back to the 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.
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Thank you both! That was helpful!! And makes sense. I have made the changes to my account. Two follow up questions….
- When I update the savings bonds value, it creates a negative cash balance. Is there another step that I should be doing to make that a positive number?
- Is the preferred way to enter 1 share of the savings bond and the price is the dollar amount you bought (say $100) or is it better to add 100 shares @ $1? I have seen it articulated both ways in the discussion threads.
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1. If you update the share price as I described, it will not affect your cash balance.
2. As I said above, buy 1 share. Then updating the where price does not require any calculation.
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