Yes, if your 1099-B reported Accrued Market Discount in Box 1f, this automatically is reported on Schedule B as interest.
Market discount is the difference between what you paid for a bond, and the maturity redemption price. If you bought a $1000 bond for $950, your market discount is $50. This discount must be included in your income, as interest, either over the period you own the bond, or when it is sold. In box 1f your broker is reporting the accrued amount of discount over the time you held the bond. TT will show it as interest income on Sch B (look and see if it's on that form), and then subtract the same amount from your gain on the sale (Form 8949), since it's already been reported elsewhere.
In the California interview, you'll come a to page 'Here's the Income that California Handles Differently'. Scroll down to Investments > Interest and Dividends Adjustment. Continue to 'Any Other Adjustments' where you can enter Accrued Market Discount, and the amount.
The adjustment will flow from the Interest & Dividends Adjustment Worksheet, to Schedule CA, Line 2.
@ChacChan
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