Zero Coupon T-Bill Interested Not Deducted for State Income

[Safety1st4emails]

TurboTax is not recognizing Schwab's reporting of interest on Zero Coupon T-Bills in a way that will generate a subtraction of the interest from Federal Income to determine state of CA interest.  If Schwab is reporting the transaction as required by the IRA, TurboTax's program should be able to pick this up.  It is not as if this is an esoteric transaction. 

From reading postings on the Community, this problem is not isolated to Schwab accounts or the state of CA.  That is the same problem exist with other brokerage firms' Form 1099 and other states.  Fifty million Frenchmen can't be wrong.  TurboTax should correct the program so that the returns do not have items that unnecessarily stick out and could cause a problem. 

[baldietax]

How is Schwab reporting it, are they using Box 1f AMD adjustment on a 1099-B, or simply 1099-INT Box 3?

[Safety1st4emails]

Schwab reported the interest from zero-coupon T-Bills on Form 1099-B

[Safety1st4emails]

I talked with Schwab this morning and was told that reporting the difference between the acquisition price and redemption price of a zero-coupon US govt obligation that was issued as a note is properly reported as gain and NOT interest.