You do not need to report tax exempt interest on Schedule B unless it was reported to you on a 1099-INT. Even then, you're only doing so because the IRS might screw up your return otherwise.
You enter an itemized list of all sources of interest, then a line called "Subtotal" & add everything up. Below that, but above line 2, you enter any "Tax exempt interest" and "Accrued interest" as <negative> amounts. Then you subtract the TEI & AI from the subtotal to get line 2.
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