You have one complicated scenerio, you have both short and long term capital gains on an investment that resulted in losses meaning you don't have any capital gains because you did a short sale (sold for less than you purchased it for) and may even have even filed chapter 11 to avoid owing the balance to the lien holder (mortgage co). If your itemized deductions exceeds your standard deduction, it will use the itemized deductions not the standard deduction (you only get to take one). If you have any date of acquisition in your tax Federal tax return, it will trigger the AZ special capital gains tax exemption. If that is incorrect, you better go into the federal tax form and change the date, or go to a tax professional and have them do your taxes. Sounds like you don't owe any capital gains anyway, but if you don't fix the state tax return which uses the federal return to figure out your state taxes, you might under pay the state and wind up with penalties too.
