Accrued Market Discount on treasury bond

[HarrieNY]

I have a 1099-B showing a $12,000 accrued market discount for a treasury note that was redeemed in 2024. Coupon interest is on my 1099-INT of this year and of 2023,  so this seems to be fine.

I entered this in Turbotax under the short-term sales category,  where it is on the 1099-B.

I understand that the IRS treats this 'gain' as interest,  but I am not clear how to get Turbotax handle it this way:  should I check the box "I need to adjust my total tax basis"?

If so,  should  I then check the box D (accrued market discount) and enter  "total adjustments"  of $12,000 or  -$12,000?     If I enter -$12,000 it seems result in no extra federal tax;   if I enter $12,000 it seems to result in double federal tax.

If I put $0 adjustment,  it seems result in the correct federal tax,  but it shows as a capital gain,  not interest.

(I am in NY,  so I understand I would have to correct the state section separately to avoid being taxed there)

What is the best way to enter this in Turbotax?

[baldietax]

You shouldn't need to do any adjustments just enter all the boxes the way the 1099-B came... but I am guessing the issue is you need to input it as "one by one" which gives you Box 1f to fill in, which is not available when you put it in as a "sales total" summary level.  TT will then flip the box 1f over to your Schedule B.

[baldietax]

just to add, I see the AMD "D" code you are referring to on the sales total screen and both ways of doing seem to create an 8949 with code D, but doing it as sales summary method (with negative amount as the adjustment is to gain/loss to bring it to zero) doesn't seem to flip it Schedule B, as you've noticed.  Also any adjustment made to a summary total will trigger TT to tell you to mail paper statement to the IRS.

Anyway - last year I had a note with AMD and put it in as "one by one" which worked fine, it will generate Form 8949 with the code D and adjustment of gain/loss; and didn't need to mail anything to IRS (I do this for any wash sales also).