In your New York tax return, on the page that says "Changes to Federal Income," under "Investment adjustments" click the Start button for "Exempt income from US government or exempt by NY law." That will take you to a page that says "Investment Income from U.S. Government Agencies." On that page, enter the accrued market discount amount in the box for U.S. Government Interest."
The amount that you enter will be listed on Form IT-225 as a New York subtraction with code S-121. The total New York subtractions from Form IT-225 will entered on Form IT-201 line 31 and will be subtracted from your New York income.
In your New York tax return, on the page that says "Changes to Federal Income," under "Investment adjustments" click the Start button for "Exempt income from US government or exempt by NY law." That will take you to a page that says "Investment Income from U.S. Government Agencies." On that page, enter the accrued market discount amount in the box for U.S. Government Interest."
The amount that you enter will be listed on Form IT-225 as a New York subtraction with code S-121. The total New York subtractions from Form IT-225 will entered on Form IT-201 line 31 and will be subtracted from your New York income.