The process is essentially the same whether you are using TurboTax online or TurboTax CD/download. After you have entered your Treasury interest on your Federal return, Schedule B, and all other income/deduction/credit items, you will then move to prepare your Minnesota return. As you move through the screens in the MN section, you should see the screen, Income Allocations. There will be two columns on that screen, one reflecting your Federal income/loss amounts and another column for those Federal amounts allocable to MN. With regard to your Treasury interest, which should be reflected in the Federal column, enter a zero as the portion of your Treasury interest allocable to MN.
MN Schedule M1M should reflect your Treasury interest as a subtraction from MN taxable income. Line 7 of MN Form M1 (MN Individual Income Tax) will contain your Treasury interest amount; however, the line 7 amount, along with the amounts, if any, on lines 4 - 6 are subtracted from the federal amount when calculating MN taxable income.
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