I have this same situation but my discounts are significantly greater. Apparently, this discount is counted as interest rather than a capital gain per this response. This doesn't seem to logically make sense to me but were dealing with the IRS.
The NJ tax site indicates that interest and cap gains on US treasuries is NJ Tax exempt. Is this discount NJ tax exempt? It should be if cap gains are intended to be NJ tax exempt. How do I adjust for this in TT? It currently appears to be treated as NJ taxable...
