Get your taxes done using TurboTax

When you enter the Form 1099-B in the Investment Income section of TurboTax, you need to enter the cost basis as $35,763 and the accrued market discount as $1,237. The proceeds are entered as $37,000.  The accrued interest will then be entered as interest income on your Form 1040, line 2(b). You will see an option on the screen where you enter the proceeds and cost basis that says I have other boxes on my 1099-B.  You need to click on that box to see the option to enter your accrued interest.