Market discount is the difference between what you paid for a bond, and the maturity redemption price. If you bought a $1000 bond for $950, your market discount is $50. This discount must be included in your income, as interest, either over the period you own the bond, or when it is sold. In box 1f your broker is reporting the accrued amount of discount over the time you held the bond. TT will show it as interest income on Sch B (look and see if it's on that form), and then subtract the same amount from your gain on the sale, since it's already been reported elsewhere. Hope this helps.
