This trails off another post (https://infinitekind.tenderapp.com/discussions/investments/8136-bond-maturing-discussions) and I thought I'd start a new thread to discuss my ideas on how to record some government bonds. I decided to keep each bond type a separate discussion since they might be handled differently.

This is what I came up with and I am looking for feedback/affirmation that I am performing the proper steps. If there is a better way, please let me know. This post only discusses treating as a security in an investment account. I seem to have a complete mental block about how to use asset accounts, perhaps someone can add how to do asset.

I-Bonds basically yield interest on a monthly basis. They are issued in $25 increments and the interest rate resets every 6 months. There is a weird way interest is calculated, but it doesn't really matter from an MD perspective, it's enough to know what the interest amount is every month.

I typically create a security something like "US I-Bond - July 23" so I know when I'm able to sell (there is a mandatory 1 yr hold period). Create a unique security for each unique month of I-Bonds purchased (I-bonds purchased anytime in a month are treated with the same start date and begin accruing interest from the 1st of the month). So if you buy some on the 12th and more on the 20th of the same month, it is the same security.

9/1/23 | Buy | US I-Bond - July 23 | 10 sh | $25 | $250 Total
Every month end record interest : 9/30/23 | DivReinvest | US I-Bond - July 23 | .08 sh | Cat:Tax-exempt Int | $25 | $2 Total
10/1/23 | Sell | US I-Bond - July 23 | 10.08 sh | $25 | $252 Total

I think this is representative enough as it properly records interest as it happens, reflects net worth properly at any point in time, and from what I can tell does not generate a capital gain on the sale. You keep adding the DivReinvest transactions at month end for as long as you hold the I-bond (I think you can keep it 30 years). In reality it is the bond value that actually changes, but the calculation is bizarre and changing the price in MD results in a capital gain.

I will add that if you sell an I-bond before 5 years, you will lose the last 3 months interest. To remedy this add a simple entry

10/1/23 | MiscExp | US I-Bond - July 23 | $sum of last three months interest recorded | Bank Charge:Early Withdrawal Penalty

Or you can just delete the last three months of interest. I haven't received a 1099 Int from Uncle yet so I can't tell you the "legal" way.