Can I deduct prepaid interest from closing disclosure

Yes, but only pro-rated amounts for interest and property taxes (based on a daily amount from your closing date until your first payment) are deductible.

Prepaid mortgage interest and property tax held in escrow is not deductible. 

You will need to itemize your deductions to claim mortgage interest which will require you to upgrade to TurboTax Deluxe

I am curious where you obtained this answer.  IRS Topic No. 504 clearly states that you may deduct the entire prepaid points in the year of purchase or refinance based upon a 9 point test.  I would also like to know how to make turbotax recognize this so the value is used.

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Points are allowed to be deducted ratably over the life of the loan or in the year that they were paid. You can deduct the points in full in the year you pay them, if you meet all the following requirements:

1. Your main home secures your loan (your main home is the one you live in most of the time).
2. Paying points is an established business practice in the area where the loan was made.
3. The points paid weren't more than the amount generally charged in that area.
4. You use the cash method of accounting. This means you report income in the year you receive it and deduct expenses in the year you pay them.
5. The points paid weren't for items that are usually listed separately on the settlement sheet such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes.
6. The funds you provided at or before closing, including any points the seller paid, were at least as much as the points charged. You can't have borrowed the funds from your lender or mortgage broker in order to pay the points.
7. You use your loan to buy or build your main home.
8. The points were computed as a percentage of the principal amount of the mortgage, and
9. The amount shows clearly as points on your settlement statement.

@Marketstar  that information is incorrect