Your solution to deduct the accrued interest paid from the interest income on the 1099-INT is consistent with the IRS instruction from IRS Publication 550, Investment Income and Expenses at this link and pasted below. Although the instruction pasted below is for Form 1040, the method can be applied to your Form 1065 preparation.
"Accrued interest on bonds.
If you received a Form 1099-INT that reflects accrued interest paid on a bond you bought between interest payment dates, include the full amount shown as interest on the Form 1099-INT on Schedule B (Form 1040), Part I, line 1. Then, below a subtotal of all interest income listed, enter "Accrued Interest" and the amount of accrued interest you paid to the seller. That amount is taxable to the seller, not you. Subtract that amount from the interest income subtotal. (emphasis added)
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