I am sure that pk meant "prepare the KS return" not through TurboTax, since you had already said that you were not doing that, but that you should just do your KS however, and then come back to TurboTax and start your California interview.
My test does not have a Schedule E (much less in another state) so I don't know if you will see a specific screen in the California interview about the Schedule E info (to allow you to adjust it), so it sounds like the Other Adjustments to Income is the right place to put it.
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