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I don't know how Series EE bonds work, and a friend of mine who actually owns some knows less than me. So, I need help to help him...

These particular EE's are from 1985 (the month escapes me at the moment), and have $5,000 listed on them.

I presume the $5,000 is what one gets handed to them upon maturity (year 2015).

I used the bond calculator on the gov's website, and assuming I did everything correct these bonds are worth $7,314 each (which is broken between Price = $2,500 and Interest = $4,814).

If this is all correct, it would seem to be a no-brainer to sell the things. That is, if he's going to get $5,000 per bond in 2015 why not take $7,314 today?

My guess is there's a tax hit on the interest portion.

Any help, pointers, etc. greatly appreciated. I did do a search of the board first, but didn't find anything directly related to my question.


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