There are two scenarios if you bought treasuries at a discount. One is selling before maturity and the other is holding to maturity. I had argued that the capital gain for the latter should be excludable, but the law is apparently written such that in both cases the capital gain is taxable in Massachusetts. Follow this link:
https://www.mass.gov/technical-information-release/tir-80-2-income-tax-treatment-of-interest-and-gai...
