Yes, the accrued interest is causing the problem....
in your case, it ends up getting split proportionally between the box 1 and 3 values on a combined 1099-INT.
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But your proposal shown isn't quite right. For each currently combined 1099-INT that has accrued interest, (Your 1099-INT 1 doesn't need splitting...OK as-is) the others you want to split into:
1099-INT 2a: Box 1$$ and Box 11 $$; And just the accrued interest from the corporate bonds/notes
1099-INT 2b: Box 3 $$ and box 12 $$; And any accrued interest from just the Treasury Bonds/Notes.
1099-INT 3a: Box 1$$ and Box 11 $$; And just the accrued interest from the corporate bonds/notes
1099-INT 3b: Box 3 $$ and box 12 $$; And any accrued interest from the Treasury Bonds/Notes.
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Some year, TTX may program the 1099-INT entries to allow the accrued interest to be reported separately for box 1, 3 & 8...but so far, they have not.
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Then a complication to all this...is that you are not supposed to report the accrued interest on your tax return, until the year in which you actually receive income form the particular bond you purchased. SO that if you bought a bond in (say) November of 2023, and YOU don't get an interest payment from it until (say ) Feb of 2024...then you have to wait until your 2024 tax return to claim the accrued interest paid for that bond.
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
