All brokers offer a choice on treatment of discounts for Treasury Notes and Bonds, at least the one's that I am familiar with. Schwab, for example, defaults to recognize the market discount in maturity year, unless you ELECT to accrue it. So, depending on your election or default, that is what will appear on your 1099.
So if you are removing the market discount included from your Federal income for CA, it at least seems logical to remove based on what is reflected in your 1099 and thus in your Federal Income.
So if a $1,000 Note (or Bond) was purchased in 2022 for $950, and matures in 2023, the amount to remove as accrued market discount is $50. That $50 should be in your 2023 1099 and thus in your Federal AGI. If you had instead elected to accrue, your broker will reflect a lower number in 2023 and a number in 2022. With a total across years still $50. Since your state adjustment will follow income from your 1099, deduct accordingly, as far as I know.
