# Bearer Bonds **URL:** \ **Category:** Factual Questions\ **Created:** [July 9, 2009, 6:41am UTC](https://boards.straightdope.com/t/bearer-bonds/502430 "2009-07-09T06:41:53Z")\ **Posts on this page:** 14\ **Page:** 1
**Author:** ![chowder](https://avatars.discourse-cdn.com/v4/letter/c/977dab/32.png) [@chowder](https://boards.straightdope.com/u/chowder)\ **Post date:** [July 9, 2009, 6:41am UTC](https://boards.straightdope.com/t/bearer-bonds/502430/1 "2009-07-09T06:41:53Z")
I watched _Panic Room_ on UK TV last night. The bad guys managed to steal Bearer Bonds to the value of $22m but at the end were corned by the cops. Forest Whittaker, bad guy, had the bonds in his hand, the cop ordered him to show his palms which meant that the bonds were grabbed by the wind and scattered. My question is this: Would whoever found these bonds be entitled to the value of them? I cannot see it somehow, I mean if I had a bearer bond of high value and strolled into my bank with it they sure as hell would be interested in how I came to have it ---
**Author:** ![Captain\_Amazing](https://avatars.discourse-cdn.com/v4/letter/c/6de8d8/32.png) [@Captain\_Amazing](https://boards.straightdope.com/u/Captain_Amazing)\ **Post date:** [July 9, 2009, 7:13am UTC](https://boards.straightdope.com/t/bearer-bonds/502430/2 "2009-07-09T07:13:16Z")
Yep. That’s why they’re called bearer bonds. They’re not common, and the US government banned the issuance of them in 1982 because of the anonymity and the fact that they were often used for criminal transactions. ---
**Author:** ![chowder](https://avatars.discourse-cdn.com/v4/letter/c/977dab/32.png) [@chowder](https://boards.straightdope.com/u/chowder)\ **Post date:** [July 9, 2009, 11:04am UTC](https://boards.straightdope.com/t/bearer-bonds/502430/3 "2009-07-09T11:04:52Z")
> [@Captain\_Amazing](#): > > Yep. That’s why they’re called bearer bonds. They’re not common, and the US government banned the issuance of them in 1982 because of the anonymity and the fact that they were often used for criminal transactions. Without having to prove that they did in fact belong to the finder? ---
**Author:** ![Fuzzy\_Dunlop](https://avatars.discourse-cdn.com/v4/letter/f/848f3c/32.png) [@Fuzzy\_Dunlop](https://boards.straightdope.com/u/Fuzzy_Dunlop)\ **Post date:** [July 9, 2009, 11:22am UTC](https://boards.straightdope.com/t/bearer-bonds/502430/4 "2009-07-09T11:22:52Z")
> [@chowder](#): > > Without having to prove that they did in fact belong to the finder? Yes. It’s an unregistered instrument and whoever physically holds the paper the bond is printed on owns the bond. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [July 9, 2009, 12:11pm UTC](https://boards.straightdope.com/t/bearer-bonds/502430/5 "2009-07-09T12:11:48Z")
> [@chowder](#): > > Without having to prove that they did in fact belong to the finder? You don’t have to prove you own a $20 bill in order to spend it, either. ---
**Author:** ![pkbites](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pkbites/32/204_2.png) [@pkbites](https://boards.straightdope.com/u/pkbites)\ **Post date:** [July 9, 2009, 3:22pm UTC](https://boards.straightdope.com/t/bearer-bonds/502430/6 "2009-07-09T15:22:51Z")
> [@friedo](#): > > You don’t have to prove you own a $20 bill in order to spend it, either. So what is/was the use of bearer bonds over cash? The only thing I can think of is that one could have a higher value of bonds without the bulk one would need for the same value of cash. ---
**Author:** ![dracoi](https://avatars.discourse-cdn.com/v4/letter/d/90db22/32.png) [@dracoi](https://boards.straightdope.com/u/dracoi)\ **Post date:** [July 9, 2009, 3:32pm UTC](https://boards.straightdope.com/t/bearer-bonds/502430/7 "2009-07-09T15:32:13Z")
The main reason to have a bearer bond is historical. If you were issuing bonds in, say, 1800, it would not be feasible to keep a registry of each sale and each new holder. Instead, you could issue them as bearer bonds and simply redeem them to whoever showed up to claim the money 10 years later. With modern bond markets, I’d be surprised if people were still printing bearer bonds. However, sometimes regular bonds are made into bearer bonds by endorsing them. This is much like the way a check could be signed and then cashed by anyone. Bearer bonds might not be something you could cash right away, though. Many bonds don’t mature for 5 or 10 years (or more). There are technically some differences if you find a bearer bond vs buying it. You become a “holder” but not a “holder in due course.” I knew the details while I was studying for the CPA exam, but have happily forgotten them since. Still, the fact remains that you can find a bearer bond and cash it. ---
**Author:** ![chowder](https://avatars.discourse-cdn.com/v4/letter/c/977dab/32.png) [@chowder](https://boards.straightdope.com/u/chowder)\ **Post date:** [July 9, 2009, 4:06pm UTC](https://boards.straightdope.com/t/bearer-bonds/502430/8 "2009-07-09T16:06:00Z")
> [@friedo](#): > > You don’t have to prove you own a $20 bill in order to spend it, either. No you don’t but BBs are usually for a hell of a sight more than $20 ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [July 9, 2009, 4:18pm UTC](https://boards.straightdope.com/t/bearer-bonds/502430/9 "2009-07-09T16:18:52Z")
> [@Captain\_Amazing](#): > > Yep. That’s why they’re called bearer bonds. They’re not common, and the US government banned the issuance of them in 1982 because of the anonymity and the fact that they were often used for criminal transactions. They are illegal? Looks like they are just discouraged (admittedly the following is a Wiki cite): > [@](#): > > In the United States, with the passage of the Tax Equity and Fiscal Responsibility Act of 1982, debt issued in bearer form has been discouraged. The interest on any such bonds issued after 1982 would be taxable to the issuer in the case of corporate bonds, and taxable to the holder in the case of municipal bonds. In contrast, registered bonds retain favorable tax treatment. > > SOURCE: [Bearer bond - Wikipedia](http://en.wikipedia.org/wiki/Bearer_bonds) ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [July 9, 2009, 4:30pm UTC](https://boards.straightdope.com/t/bearer-bonds/502430/10 "2009-07-09T16:30:05Z")
> [@Whack-a-Mole](#): > > They are illegal? Looks like they are just discouraged (admittedly the following is a Wiki cite): The US government no longer issues them (and all government bearer bonds are now beyond maturity). A corporation or other government entity could issue them in theory, but in practice there’s little reason to do so. ---
**Author:** ![Captain\_Amazing](https://avatars.discourse-cdn.com/v4/letter/c/6de8d8/32.png) [@Captain\_Amazing](https://boards.straightdope.com/u/Captain_Amazing)\ **Post date:** [July 9, 2009, 5:03pm UTC](https://boards.straightdope.com/t/bearer-bonds/502430/11 "2009-07-09T17:03:21Z")
> [@Whack-a-Mole](#): > > They are illegal? Looks like they are just discouraged (admittedly the following is a Wiki cite): They’re not technically illegal, but as the Supreme Court put it in the history of South Carolina v. Baker: > [@](#): > > Because 310 aims to address the tax evasion concerns posed generally by unregistered bonds, it covers not only state bonds but also bonds issued by the United States and private corporations. Section 310(a) requires the United States to issue publicly offered bonds with a maturity of more than one year in registered form. 3 With respect to similar bonds issued by private corporations, 310(b)(2)-(6) impose a series of tax penalties on nonregistration. Corporations declining to issue the covered bonds in registered form lose tax deductions and adjustments for interest paid on the bonds, 310(b)(2) and (3), and must pay a special excise tax on the bond principal, 310(b)(4). Holders of these unregistered corporate bonds generally cannot deduct capital losses or claim capital-gain treatment for any losses or gains sustained on the bonds. 310(b)(5) and (6). Section 310 (b)(1) completes this statutory scheme by denying the federal income tax exemption for interest earned on state bonds to owners of long-term publicly offered state bonds that are not issued in registered form. ---
**Author:** ![mack](https://avatars.discourse-cdn.com/v4/letter/m/b19c9b/32.png) [@mack](https://boards.straightdope.com/u/mack)\ **Post date:** [July 9, 2009, 5:45pm UTC](https://boards.straightdope.com/t/bearer-bonds/502430/12 "2009-07-09T17:45:03Z")
[Here’s](http://www.nytimes.com/2009/06/26/business/global/26fake.html) a recently foiled US gov’t. bearer bond caper. ---
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [July 9, 2009, 9:10pm UTC](https://boards.straightdope.com/t/bearer-bonds/502430/13 "2009-07-09T21:10:03Z")
If only the whole world read the Dope, this ignorance wouldn’t be possible! 🙂 ---
**Author:** ![UDS](https://avatars.discourse-cdn.com/v4/letter/u/ecae2f/32.png) [@UDS](https://boards.straightdope.com/u/UDS)\ **Post date:** [July 10, 2009, 1:17am UTC](https://boards.straightdope.com/t/bearer-bonds/502430/14 "2009-07-10T01:17:32Z")
> [@pkbites](#): > > So what is/was the use of bearer bonds over cash? The only thing I can think of is that one could have a higher value of bonds without the bulk one would need for the same value of cash. Plus, cash doesn’t pay interest.