Following up on this again as I want to be sure other readers understand who are in the same situation. I fixed the problem using the override feature in TurboTax Desktop to force $0 on line 37.
Page 13 of the Arizona 140NR instruction packet for 2024 clearly states "As a nonresident, you may take the allowable subtraction for *only* those qualified net long-term capital gains that are from Arizona sources. You may subtract 25% of any qualifying net long-term capital gain included in your federal adjusted gross income that is derived from an investment in an asset acquired after December 31, 2011.
Likewise, the instructions on the 140 form are clear that lines 34-37 should all reflect only Arizona sourced gains and losses.
Because Lines A and E on the Smart Worksheet for this section are pre-filled, I am unable to change them. If I enter $0 on line G, then the full amount is shifted to Line F, which indicates assets were purchased before 2011 (this is not true).
TurboTax is encouraging users to commit tax fraud by preventing them from filling the form out correctly. I would not have discovered this error had I not switched to forms mode so I can only assume that many tax payers have been led astray by TurboTax.
For reference, the following screenshot shows how the Smart Worksheet is set up. The number on Line A is pulled from the Federal 1040 and cannot be changed. Line E is also unchangeable. Lines F and G are linked so if you enter $0 on one, the total populates to the other.
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I spent hours on the phone with TurboTax trying to get this glitch fixed and at one point, customer service attempted to direct me to this thread, which I had initiated myself hours before and which remained unresolved, as a resolution. There was only one agent (Patricia) who offered any helpful advice and that was to use the override function. TurboTax will eventually have to own that their software has caused many people to underpay their taxes due to misallocation of a credit.
