Get your taxes done using TurboTax
Agree with @SusanY1 that TT is doing it correctly.
Generally, when you sell a bond that was purchased at a discount there will be 'Accrued Market Discount' (AMD) reported in Box 1f. You will also have a gain on the sale based on the market price at time of sale (proceeds - cost). The lesser of these two is considered to be ordinary income and will be adjusted on Form 8949 to reduce the gain and this amount will be reported on Schedule B. If you had a gain in excess of the AMD that had accrued at the time of sale, then that will remain and reported as a capital gain on 8949 / Sched D.
If you hold that bond to maturity then the gain will equal the AMD, and it will all be reported as ordinary income on Schedule B and zero capital gain.
see IRS Publication 550 'market discount bonds':
https://www.irs.gov/publications/p550#en_US_2024_publink100010016
"You must treat any gain when you dispose of the bond as ordinary interest income, up to the amount of the accrued market discount"
and instructions for Form 8949 adjustment in col g:
