Treasury Bill Sale

[chessgm]

I acquired US Goverment Treasury Bills via auction, but then sold them before maturity. Schwab is reporting them on 1099B (not reported to the IRS) but I read somewhere I should be reporting them as interest. How are these treated tax wise? If they should be changed to interest, how do I do that in turbotax?

[DianeW777]

No, it is reported as a sale when a Treasury Bill is purchased and then sold. You may also have interest income to report for the holding period (date of purchase to date of sale).

When you bought the Treasury Bill you may have paid accrued interest to purchase, if so, this would also be part of your purchase price paid to the seller.

To enter your sale in TurboTax, follow these steps. 

1. Open or continue your return.
2. Navigate to the investment sales section:
   • TurboTax Online/Mobile: Go to investment sales. If using this application, make sure it is open
   • TurboTax Desktop: Search for investment sales and then select the Jump to link.
     • Or Personal Tab > Continue > I'll choose what I work on > Scroll to Investment Income > Select Stocks, Cryptocurrency, Mutual Funds, Bonds, Other
3. Answer Yes to the question Did you sell any of these investments in 2025? 
   • If you land on  the Investment sales summary or Your investments and savings screen, select Add More Sales or Add investments.
   • Click this link for more information. Where do I enter Investment Sales?

[chessgm]

Thank you for your quick reply.

I bought a 6 month T-bill at auction from the US government through my brokerage account, so the interest was left in the account. I sold it about 5 months later (1 month before maturity). I made $2,510.46 on the sale (final sale price - initial cost of T-bill at auction). Is there a calculation somewhere where I can figure out how much was interest and how much was capital gains?

[DianeW777]

If you received a 1099-INT, report that as interest income and then add it to the cost basis to report your sale of investment to determine your tax gain or loss. Be sure to select Bond for the type of investment. 

To determine the interest (or income) on a Treasury bill (T-bill) sold before maturity, calculate the difference between the sale price and your original purchase price, often adjusting for the time held. Interest is technically the pro-rated amount of the discount (difference between original price and maturity value) based on the days you held the security. 

@chessgm 

[chessgm]

I received a 1099-B for this transaction, not a 1099-INT

is there some way that TurboTax can do the math for me, or do I have to do it manually and input it manually somehow?

[LCCretiredCPA · Accepted solution]

Treasury bills are treated differently from Treasury notes or bonds.  You buy them at a discount with no accrued interest. If you hold them to maturity or sell prior to maturity, the difference between the maturity or sale price and what you paid is interest.  Schwab should be reporting this difference as US government interest on your 1099-INT.  Check the detail of what is reported on the 1099-INT.  No further reporting is needed if this interest is shown there. 

If you did not get a 1099-INT, you can still report it on Schedule B as US government interest.  If the Treasury bill is not shown on the 1099 B, but only in the year end summary information not provided to the IRS, you do not need to show anything on Schedule D.  There may be a small amount of short term capital gain on the sale, but the calculation is difficult, and it would make no difference in your federal tax due.  I would just show the entire difference as interest income.  If it is reported on the 1099-B to the IRS, I would show no gain or loss on the sale.  Include the interest income you reported on Sch B as part of your basis on Schedule D.  I'm surprised that Schwab did not handle the reporting on this for you.

[chessgm]

Thank you for taking the time to type that all out! Really really appreciate you!

I bought other T bills and those were reported on the 1099-INT (I held them to maturity).

The T-bills I sold were listed separately with the following clause: "The transactions in this section are not reported on Form 1099-B or to the IRS. Report on Form 8949, in either Part I with Box C checked or Part II with Box F checked, as appropriate."

I was scouring these forums, reddit and other places and realized it can't be capital gains. I was doing the math as

[amount gained from sale]- [(days held / 182 days) x initial discount] = capital gains or loss and it's a pretty low number either way (one gain, one loss)

(182 because they were all 6 month T bills, so 182 days)

not sure if that math was correct (I found this formula after hours of googling) but the value is pretty negligible 

Will go with reporting as interest on schedule B.

Really really appreciate you posting again. I won't be selling T-bills before maturity again... 

There are multiple reddit threads of people complaining that Schwab and Fidelity don't handle it properly, though I only found them since this is the first time I ever needed to sell T-bills.