For federal purposes, my rental property losses were fully allowed as they were below the maximum allowed (and fully utilized as I had other income to offset against). So there was no federal carryover. For Arizona purposes, my rental losses had no other income to offset. I had a negative total income in Arizona last year and paid zero tax. But this year I have a rental property gain that is smaller than last year's loss. Yet it still shows me owing tax to Arizona. So it's like for Arizona purposes, my loss is going to waste???
