@DianeW777 you response is mixing up the accrued market discount with accrued coupon interest on the purchase (if any), latter will apply but not for $1500
@Jaganlv this reporting is correct. Accrued Market Discount (AMD, the $1500) is not taxable as a capital gain it's ordinary income. Box 1f creates an adjustment to zero out the G/L on your Schedule D / Form 8949. TT should automatically move this amount to your Schedule B as "Accrued Market Discount" entry you should not have to enter that. The end result on Schedule B should be $700 in coupon interest and $1500 in AMD. Check your Schedule B to see this has all flowed correctly from the imported 1099s.
Back to the guidance from Diane, if you bought this on the secondary market in Dec 2023 you would have paid some accrued coupon interest (around $100? - see trade confirmation, it may also be in your brokerage consolidated 1099 as an supplementary information, possibly for 2024 or 2023) which reduces the first coupon you received in 2024 so your net taxable amount on that $700 coupon will be closer to $600 depending the exact dates. Be sure to enter that adjustment, it will reflect as "Accrued Interest" on Schedule B (as a negative number).
2 issues to be aware of:
1. If you have multiple income boxes on your 1099-INT, TT will not know which Box 1, 3 or 8 the accrued interest adjustment applies to. You will need to enter a separate 1099-INT for the Treasury interest to separate it from Box 1 and 8 to get the correct treatment.
2. TT does not include the $1500 AMD component as part of the state exemption / income subtractions. There is some ambiguity in different state tax codes and debate whether it's exempt. If it is exempt (can't advise on that), you likely need to make a manual subtraction to your state taxable income which most of the state programs support but may preclude e-file in some states (e.g. NY).
