When a bond is purchased by an individual and a co-owner, who must report interest if only the individual paid for it?

When a bond is purchased by an individual and a co-owner, the reporting of interest income generally depends on who made the actual payment for the bond. In this scenario, since only the individual paid for the bond, that individual is the one who must report the interest income.

This is because the IRS requires taxpayers to report income they actually receive, regardless of ownership structure. The co-owner does not report any interest income from the bond since they did not contribute to the purchase price. Even though both individuals may be considered co-owners, the tax implications are determined by who paid for the bond, reinforcing the principle that the actual payer of the income is the one liable for reporting it.

In cases where both parties contribute to the purchase, they would report the interest income proportionately based on their investment. However, in this specific scenario, the individual who fronted the entire purchase cost is solely responsible for reporting the interest income.