US Savings Bond Interest Categorized as _RlzdGain instead of _IntInc

bookgroupie · May 2020

I sold several US Savings bonds and recorded the interest on that day. The interest is showing up as _RlzdGain. When I recorded sale, I used Sell-Shares Sold, I could not get Bonds Sold to work.

The _RlzdGain is now showing up in long term capital gains, but should be in Schedule B. Any thoughts?

Thanks.

Rocket J Squirrel · May 2020

How much did you pay for each bond & how much did you sell each bond for, ignoring interest?

bookgroupie · May 2020

Sorry for the delay, many of the savings bonds are gifts and I do not know the original purchase price. All were sold about face value.

Bob@44 · September 2021

I have the same problem. I think it should go to an Interest category. If you use Bond Sold it has a field for interest, but puts the interest in the RlzdGain. I have it going to a cash account and it creates 2 different entries then. one for the bond amount and one for the interest, but still puts it in RlzdGain. I have it going into a cash account. If I just put it as Soldx it works OK, but it doesn't show the interest as income then. If I edit the transaction in the cash account, splitting the amount category of the purchase price and the amount of interest, it goes to RlzdGain as a debit and the interest category as a positive. What is the proper procedure for entering a sale/redemption of matured savings bond?

Jim_Harman · September 2021

Normally it is best to treat savings bonds as securities with a security type of US Savings bond and not as Bond. You should create a different security in Quicken for each face value and maturity date you hold, so if you have a $100 bond that matures on 7/31/2025 you could call it SB 100 2025-07-31 or something similar.

You would then create an off-line Brokerage type investing account to hold all the savings bonds.

When you buy the bond, normally at half the face value, you would enter a Buy (not Bonds Bought) transaction for 1 share at the purchase price. If you receive the bond as a gift, you would enter an Add instead.

Usually people defer savings 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.

One thing you might do would be to increase the bond's "share" price as the interest accrues over the years. Then when you redeem it, you would lower the price back to the purchase price and record a ReinvInt [correction: Int payment] for the total interest, then record the sale. I think that will make Quicken's net worth and tax calculations correct.

Others may want to weigh in on this ...

Frankx · September 2021

Hi @Bob@44

So the first thing we need to straighten out is that the advice that was given above (before you added your comment today) is incorrect. US Savings Bonds are not "bonds" as Quicken's design (or as general investment guidance) would envision them and they are clearly not "securities".

US savings bonds are savings vehicles. They cannot be traded on any market, their value is derived from a combination of their denomination and a stated schedule of interest to be accrued over time. As a unique type of "investments", they were intended simply to provide interest income to their holders backed up by the strength of the U.S. government. There is never any "capital gains income/loss" from US Savings Bonds - period. And you don't even need to know the price that was paid when the bond was purchased. The amount of interest income that was earned over its life will be reported to you on a 1099-INT when you cash-in the savings bond.

In Quicken, you should record the difference between the cost (purchase price) of the bond(s) and the amount received when you ultimately cash in the bond as "interest income" - in the year in which you cash in the bond(s). I would suggest that when you purchase bonds you should add them to a separate "savings account" in Quicken.

Of course, if you want to add the "accrued interest" to the account on a yearly basis, you could do that by adding the computed interest income each year to the Quicken account, but I'd suggest using a category like "Other Inc" rather than "Interest Inc" so that it doesn't get reported as income until the bonds are cashed-in. Then in the final year when you cash-in the bonds, you could enter an entry reversing the prior years accrued amount and recording the final total interest amount as interest income.

I hope this helps. Let me know if you have any followups.

Frankx

Jim_Harman · September 2021

If you have several savings bonds an you adjust the share prices to track the accrued interest, you may want to use the method described here by @dagger
https://community.quicken.com/discussion/7889020/make-savings-bond-tracking-easier

to download and import the prices.

Chris_QPW · September 2021

I think a bit of clarification is in order. @Frankx is correct that Saving Bonds aren't "bonds" is in the ones you see in Quicken or stocks/securities for that matter. But people want to enter them in Quicken and since there isn't any direct "Savings Bonds" in Quicken various workarounds have been used to record them.

But I think the main problem discussed in this thread is how people are recording the interest.
No matter if you use bonds or a security then any change in value that you record is in a fact capital gain.
Treating it like that might be easier because you can do things like the import of a CSV file that @Jim_Harman points to in the link to the other thread in comment above.
But if you use the "change in value" then you have to accept the fact that it will be recorded in _RlzdGain.

I personally did this differently.
I recorded them as a bond, but when it came to the interest I entered that using "Inc - Income (Div, Int, etc.)" on the Interest line. This puts the interest on the Schedule B/_IntInc category.
When I went to sell the bond, I sold it for exactly what I first entered it as. Therefore there isn't any gain.

Which brings us back to the first question that @Rocket J Squirrel asked, because clearly to get the right amount of interest at the time of redeeming the bond you must have entered all the interest into Quicken. Which implies that what you put in for buying the Savings Bond should be what was entered on the first purchase, and then if needed whatever amount of interest there was up to the point that you started entering it into Quicken needs to go in as the next transaction and an Income transaction (given that you wouldn't know the history of all the interest payments, or want to put them all in).

Jim_Harman · September 2021

@Chris_QPW, I think if you follow my method carefully you will see that it does not result in _RlzdGain.

I suggest that while you hold the savings bond, you track its increasing value by adjusting the "share" price. This is unrealized gain and is (currently at least) not taxable.

Then on the day you redeem the savings bond, you drop the price to the purchase price, record an Int payment (not ReinvInt as I originally said above) for the total interest amount and Sell it. This should leave you with a realized gain of zero, the correct amount of taxable interest, and cash equal to the redemption price.

Am I missing something?

Chris_QPW · September 2021

Jim_Harman said:

I suggest that while you hold the savings bond, you track its increasing value by adjusting the "share" price. This is unrealized gain and is (currently at least) not taxable.

Then on the day you redeem the savings bond, you drop the price to the purchase price, record an Int payment (not ReinvInt as I said above) for the total interest amount and Sell it. This should leave you with a realized gain of zero, the correct amount of interest, and cash equal to the redemption price.

Am I missing something?

Sorry I wasn't referring to your suggested method of doing it above (it seems fine). I was looking at the other thread where the person was using a CSV file to import the current prices into a "security" that he created called Savings Bonds. At least to me that sounds like it would end up with the same problem if one is concerned about which category it is reported in. Of course all of this depends on what one does with the purchase/sell price. The point being that the they should zero out so that you don't have any capital gains, and you should have some way to post the interest in the right category.

US Savings Bond Interest Categorized as _RlzdGain instead of _IntInc

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