Hello all. I hope your tax season is off to a good start.

I have a client with a number of US Treasury Note redemptions reported on 1099-B with Accrued Market Discount reported on 1f. I've entered it all in ProSeries and the AMD correctly flows to Schedule B as interest.  My understanding is it is interest on a US Obligation, which is not taxable by the State (in this case Arizona). But Proseries doesn't seem to give any option to subtract it on the State like it automatically does with Treasury Obliations reported on Schedule B directly. And I can't find any way to make an adjustment on the Arizona return unless I perform an override to put in on Line 28 of the AZ 140 ( Interest on US Obligations such as U.S. Savings Bonds and Treasury Bills).

So is Accrued Market Discount taxable by the State? And if not, any idea how to subtract that on the Arizona state return in ProSeries? I appreciate any help.