Hi - I'm new to large scale fixed income investing, so new to this problem - but I have a very large sum in TVA and similar non-governmental bonds which are exempt from State taxation (here in CA, not your lovely state). It seems like the biggest part of this problem is not so much TT as the brokerages, which report this income on line 1 of the 1099-INT, so even if you try to override it in TT the IRS will see a conflict. It seems like the brokerage needs to either report it on line 3 (as a "Treasury bond") or perhaps use bond 13 for the reported amount and box 14 for the CUSIP. I'm going to contact Schwab on Monday to see if they can re-do their 1099; has anybody else tried to deal with this problem by addressing it with the brokerage?
