In order to have line 38 of the NC D-400 Schedule S show that the taxed PTE income is coming from a K-1, take the following steps.
As you go through your NC return, there will be a screen that says 'Tell Us About Your State Schedules K-1'. If you have already entered some information, click Edit beside the name of your K-1. This will take you to the screen titled, 'Shareholder's Share of North Carolina Income, Adjustments, and Credits'.
On this screen, the information states that the amounts entered on lines 1 through 10 do not transfer to other parts of the return, but that amounts entered in boxes 2, 3, 7, and 8 require additional information. This is where you will enter the information about the Box 3 deductions from income (loss) related to the taxed PTE income. Enter the amount of the taxed PTE income in box 3, along with any other applicable amounts. Click Continue.
If you have entered anything in boxes 2, 3, 7, or 8, an additional screen will come up for each box so that you can give the specific details. These amounts entered in the follow-up screen will be reported in other parts of the return as needed. Entering the taxed PTE income in line 38 will transfer that amount to the K-1 column of the D-400 Schedule S worksheet, then to the D-400 Schedule S.
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