Treasury bills are treated differently from Treasury notes or bonds. You buy them at a discount with no accrued interest. If you hold them to maturity or sell prior to maturity, the difference between the maturity or sale price and what you paid is interest. Schwab should be reporting this difference as US government interest on your 1099-INT. Check the detail of what is reported on the 1099-INT. No further reporting is needed if this interest is shown there.
If you did not get a 1099-INT, you can still report it on Schedule B as US government interest. If the Treasury bill is not shown on the 1099 B, but only in the year end summary information not provided to the IRS, you do not need to show anything on Schedule D. There may be a small amount of short term capital gain on the sale, but the calculation is difficult, and it would make no difference in your federal tax due. I would just show the entire difference as interest income. If it is reported on the 1099-B to the IRS, I would show no gain or loss on the sale. Include the interest income you reported on Sch B as part of your basis on Schedule D. I'm surprised that Schwab did not handle the reporting on this for you.
