Enter the amount from Box 1f as a negative number in the Total adjustments to gain (or loss) and Code D as the adjustment code.
Code D lets the IRS know the gain is being adjusted for an accrued market discount. The adjustment amount will be reported as interest income on your tax return. If it does not carry to Schedule B automatically, you will have to carry it over by entering the amount in the Capital Gains Adjustments Worksheet in Forms mode. The Accrued interest to schedule B in Part IV should be highlighted. Enter the adjustment amount here.
What is happening is that you are recognizing less of a gain on this sale because a portion of the gain is being reported as interest.
