After days on the phone, I found a workaround to this stupid bug that let me e-file and preserved the credit.
Go to forms on schedule California schedule S. In the "double taxed income smart worksheet "column e, where you are supposed to enter the double taxed income only if is different, just enter the same number. This overrides the number in column d and bypasses the bogus error check. If you do this be warned you can't delete that column anymore without deleting the schedule S and starting over. I didn't try that. I just filed because it uses the same number. I don't know if the CA tax people will get confused because the same number is entered there.
