US TREASURY BOND DISCOUNT IS NOT PICKED UP AS EXCLUDED INTEREST ON MY MASSACHUSETTS TAX RETURN

[Taxing7]

I purchased Treasuries on the secondary market at a discount.  The financial institution reports interest paid on a 1099 INT Form.  The discounts appeared on Form 1099 B.  The federal return dictates recording the discounts on a gain and loss schedule.  The gain is them reported on Schedule B as Interest.  When the data is transferred to the State return, only the amount on the 1099 INT appears on the Other Interest and Dividends Excluded Statement.  This leaves me with a large sum reported as taxable income at the State level when it should be excluded.  How do I fix this when all of the information reported at the Federal level is correct?

[DaveF1006]

After you enter your information from your 1099 INT, there is a follow up screen you need to answer so that Massachusetts doesn't tax the income. The screen looks like this.