After investigating how other software such as Taxact does it, I think I found a work around. If you check out Taxact, they don't file the capital gain and the subsequent QOF investment in one raw. Instead, they separate it into two transactions:
one is filing the capital gain form to report your gains, which is easily done in Turbotax; the QOF is reported as another investment transaction -- buying $0 on the day of the capital gain, selling the QOF investment $ amount as negative # on the day of QOF investment. Write 'QOF investment, code Z' in the description. At least Turbotax will calculate the tax correctly and it didn't complain when I did this in the software.
I plan to efile and see what happens. If IRS accepts it, I will just mail form 8997 to IRS.
Following the instructions in Turbotax then override it will result in incorrect tax amount. So it doesn't work that way.
