sounds good... yes the "accrued interest included in proceeds (market discount)" verbiage is confusing, it changes to that when "Bond" is selected, they're over-cooking this screen with that product dropdown which isn't required by Form 8949.
the "the accrued interest on this bond is reported in 1099-Int" question (again confusing to keep referring to "accrued interest" here) - I think is allowing for the election to report AMD in income "currently" each year so the AMD in the 1099B would already have been taxed in that case, but this is an uncommon election I believe (section 1278(b) - see Pub 550). so nothing to do with your $349.62 and not checking this is correct from what you've described.
I've seen different opinions on taxability in CA not sure what the definitive guidance is, you can find many threads on this topic in the forum e.g. see
https://ttlc.intuit.com/community/taxes/discussion/accrued-market-discount-on-treasury-bonds-state-t...
someone there pointed to this newsletter that it's considered taxable
https://taxtrimmers.com/bottomline/2024-10.shtml#bond
others adjust for the exemption
https://ttlc.intuit.com/community/taxes/discussion/accrued-market-discount-at-maturity-of-us-obligat...
