Relevant definitions are found in Sec. 1278(a). The term “bond” refers to any bond, debenture, note, certificate, or other evidence of indebtedness. “Market discount” is the excess of the stated redemption price of the bond at maturity over the basis of the bond immediately after its acquisition by the taxpayer. The term “market discount bond” refers to any bond having market discount. Market discount bonds generally do not include any bonds acquired at their original issue. Also, they do not include (1) short-term obligations that mature within one year of issuance; (2) installment obligations subject to Sec. 453B; (3) U.S. savings bonds; and (4) tax-exempt bonds purchased before May 1, 1993 (Sec. 1278(a)(1)).
you have a US T-Note that had a maturity date more than 1 year after issuance. You have held it for more than 1 year if you hold to maturity. the gain will be long-term capital gain and is subject to both federal and state taxes, unless your state exempts gains on US securities, since that gain is no longer US interest income.
you probably will receive both a 1099-INT and a 1099-B
