I reached out to a local CPA who said "you should not be taxes on the AMD on the Oregon return". (I assume he means taxed). So that plus, Oregon's "detailed list of bonds and notes that
may or may not qualify for this subtraction"
Yes Treasury bills and notes—interest.
No Treasury bills and notes—gain on sale.
The fact they explicitly call out gains on sale, to me indicates they have given it some thought and since the Feds consider AMD as interest income, I'm going with it. (and as I mentioned, half expecting the state to send me a letter).
FWIW - Not surprisingly, I started a return in Pro-Connect (one of Intuit's professional tax prep products) and had the same issue. I'm curious as to whether other tax prep software do anything differently.
