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Buying Treasury Bills on secondary market. How is this treated in CA?

I bought treasury bills on the secondary market for a discount. I know for federal taxes this is interest income. On the state taxes in CA, is the entire discount say $2,000 tax exempt or do I have to only take the % of this discount based on the days I owned the bill divided by the total days of this bill from issue date to maturity? 

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Buying Treasury Bills on secondary market. How is this treated in CA?

I don't know about CA tax peculiarities, but the general logic you would only be able to exclude % of the discount for the time you owned it divided by the entire maturity of the bill doesn't make sense to me.  When you buy it on the secondary market your discount is already taking into account days remaining to maturity.  e.g. if a bill is issued at 98 for 6 months and you buy it with 3 months remaining, the price will be around 99 +/- any significant shift in short term rates.


Some brokers report T-Bills differently but the simplest reporting is just 1099-INT Box 3 for $2000 for example in your case, with no 1099-B.  I'm not aware of any distinction between that interest and coupon interest on a T-Note for example.

 

Discounts reported on 1099-B with AMD in Box 1f (e.g. Treasury Note) is a more complicated issue as they are not designated as Treasuries in TT when that income is adjusted onto Schedule B as ordinary income, and don't flow thru for state exemption, and there are various ambiguities and debates on the internets about exemption of that interest depending on individual state tax codes; but if you don't have that situation then you should be fine (avoid low coupon discount Treasury Notes or you could encounter this issue).

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