It's not from sale of stock but from redemption of a US Treasury obligation and the gain or loss on  Form 1099-B is zero. Besides, the government instructions for Form 8949 says to report market discount as interest income on Schedule B. I found the answer to my question. If you  double click on any data field on the 1099-B worksheet, it opens capital gain (loss) adjustment worksheet and down below the page on Part IV that's is where you enter the amount of the interest income to go to Sch B. I was just wondering why you have to manually enter the amount. Why is it not automatically populating that field when you enter the adjustment and assign code D on the 1099-B worksheet?