Thank you for the work-around to the accrued market discount subtraction. My interest is from T-notes purchased below face value and held to maturity. I see conflicting opinions on whether the interest is exempt in CA, something I had taken for granted. Someone has even posted a reply from the Franchise Tax Board stating that the accrued discounts are considered taxable income. Has anyone found something in the CA tax code that addresses this?
Editing to say that I think the taxable treatment only applies to bonds purchased at a discount, not to original issue bonds/notes held to maturity.
