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@AmyC unfortunately this is not the situation. The income I am reporting is indeed rental income (for two properties) and the properties have not been sold. 

The capital gains figure is being pulled from my Federal 1040 by TurboTax for no reason. I already entered $0 in the Arizona Income column for everything except for the rent. The figure is prepopulated into the smart worksheet for the capital gains credit and cannot be changed (see my previous post in this thread). 

The following screenshots show my information entered correctly for Arizona and the numbers that are outlined in green are pre-populated by TurboTax. 

This is a TurboTax error.