AZ
does not permit the taxpayer to use a capital loss carryover incurred
from non-Arizona sources while the taxpayer was an AZ nonresident. The whole carryover for AZ state tax purposes is lost. Turbo Tax handles this required adjustment in the program.
TurboTax allows for this rule in the AZ interview. Go over AZ again and look for the Any Adjustments screen. There is a
check box on the third line down on the list which states, "Deducted
from federal income a Non-Arizona capital loss carry-forward that was
incurred while a nonresident of AZ".
Checking this box will bring up a screen which allows you to enter the amount of the loss. This will adjust the non-AZ capital loss carry-forward to be removed from the AZ return.
