1099-B has long term capital gains marked under column 1f and if entered it that way they show up as interest income, WHY?

[numnuts]

1099-B  When entering long term capital gains on tax exempt bonds into form 1041, the gains are listed under column 1f and when I enter it there, it becomes interest income on the 1041, not long term capital gains.

[tagteam · Accepted solution]

"... it becomes interest income on the 1041..."

That would be the correct treatment if you had not been accruing the discount over the period of ownership of the bonds.

See https://www.irs.gov/publications/p550#en_US_2016_publink10009981