Report the actual taxable amount. My advice would be to reduce the taxable interest by the accrued amount (paid at purchase of the bond) in Box 3. This will carry the appropriate figures to both the state and federal without entering your adjustment amount. You can keep the information documents with your tax file should the IRS or state request information later.
- Form 1099-INT and Purchase Documents Remain with your tax file (on paper or as a computer file).
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
