Basis in Law

[John Howard]

The bank will stop paying interest by converting your account to a non-interest bearing account. Since you are no longer granting it the privilege of profiting from your funds in the account, it stops giving you the privilege of interest on those funds.

What if the account was non-interest bearing from the start? Would that be a lawful money account or am I reaching too far?

[martin earl]

What if the account was non-interest bearing from the start? Would that be a lawful money account or am I reaching too far?

The best way to think and act is this, endorsement creates the "taxable event".

Non endorsement (demand is made for lawful money per 12-USC 411) makes it a non-taxable event.

It is all on what YOU do, not what they do.