In the State taxes, do I check yes on "Sales of Government Obligations" if I sold U.S. Treasury Bonds? The bond's int. was on a 1099-INT and is not on the Schedule D.

[nhermes]

My 1099-INT only had value in Box 3, which did not increase my State Tax amount.

[DianeW · Accepted solution]

The interest on US Treasury Bonds is not taxable to the state. The state tax returns do not tax any interest earned on US obligations. This is reported on the interest section and not on Schedule D.

The sale of the bond is a different matter.  If you actually sold the bond (does not include redemption of the bond) to another person and you have a gain on the sale (not the interest earned on the bond) then it would be taxable.