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I have tried several Google and Stack Exchange searches, and I tried looking through the IRS website, but I haven't found anything that answers my specific question.

I may have made a mistake. Last year, I bought I-bonds from the TreasuryDirect website. This year, their interest rate went down so I chose to sell. I wanted to wait as long as possible to initiate the sale while still causing the tax liability to fall in 2023. I initiated the sale on the TreasuryDirect website a few hours ago, but the status is "Pending Redemption (01-03-2024)". Does this mean I waited too long and the tax liability will fall in 2024 instead? If so, is there any way to fix my mistake and bring the liability back into my 2023 taxes, or am I stuck?

For the benefit of anyone reading this question in the future, today's date is Friday, December 29, 2023. It is the last business day of the year.

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First, you don't have a capital gain on a savings bond. Ever. In fact even for other bonds that are issued at a discount (including some marketable Treasuries) the 'gain' you get when receiving face value at maturity is called "Original Issue Discount" aka OID and taxed as interest ratably each year you hold it, not as gain. Except if the term is 1 year or less it isn't called OID but it is still taxed at ordinary rates, like interest. And if you buy a bond that has lost value (due to its coupon no longer being competitive or its issuer being downgraded) that 'market discount' also is treated as interest.

For Series E,EE,I Savings Bonds, for most individual taxpayers the usual procedure is to report all interest "at" (in the tax year containing) maturity or other redemption, when you actually receive it. However you have an option to report interest each year and at redemption exclude all but the last partial year, and if you didn't start out doing this (which if you bought before the middle of last year you didn't) you get one free change from "method 1" (deferral) to "method 2" (pay now).

Thus you can elect to report the interest posted in 2022 (if any) and 2023 on your 2023 return, and then report on your 2024 return only the portion of interest from the last posting date in 2023 to the redemption date -- but since the 1099-INT will be issued showing the full amount for 2024, you actually put that amount on Schedule B and then subtract the amount previously reported for 2023. See https://treasurydirect.gov/savings-bonds/tax-information-ee-i-bonds/ and for details the section on US Savings Bonds in IRS pub 550 and this linked related item.

Note: the update of p550 for 2023 isn't up yet -- according to my logs, p550 isn't usually updated until March and sometimes April following the tax year -- but the Savings Bond provisions haven't changed in many years and I'm confident they won't change this year. However, when IRS posts a pub update it (IME always) breaks the URL #fragments, so future readers may have to use the table of contents to find the section I describe, and follow the link it includes.

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  • Thank you. This might actually be a better answer than littleadv's. I will have to look more into it.
    – CPomerantz
    Jan 2 at 14:57
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    @CPomerantz I'm not at all offended by losing the check mark to this excellent answer.
    – littleadv
    Jan 2 at 23:06
  • I forgot that you could reassign the checkmark - I don't post questions on any Stack Exchange very often. Done now.
    – CPomerantz
    Jan 3 at 14:30
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I-Bonds are not traded, you redeem them with the Treasury. As such, the transaction is based on their redemption schedule, usually the next business day. The next business day from today will be in 2024, so your transaction will occur in 2024.

You cannot make it happen in 2023 at this point of time.

The transaction date is the date of the actual redemption, so the taxable event is going to be in 2024.

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  • Thank you for the quick answer. I suspected this would be the case as soon as I saw the redemption date, but I figured I might as well ask here.
    – CPomerantz
    Dec 29, 2023 at 19:31

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