Whoever told you that this goes on Schedule D is mistaken. The earnings distributed with the returned contribution are taxable as ordinary income, not as capital gains, and must appear on line 15b of Form 1040 or line 11b of Form 1040A. They must also appear on Form 5329 as an early distribution.
You must request that your Roth IRA custodian make a return of contribution of $1,280. The custodian is then required to calculate the earnings attributable to the $1,280 and distribute that simultaneously with the $1,280 (which, based on your assertion of the amount of the earnings, will result in a distribution of $1,369.39).
In TurboTax, for your Roth contribution you'll indicate the entire amount contributed, including the $1,280, then in the follow-up indicate that you had the $1,280 excess returned. If the excess contribution for 2016 was made in 2016, because you won't receive the code JP 2017 Form 1099-R until next year, you'll enter a made-up code JP 2017 Form 1099-R with $1,369.39 in box 1, $89.39 in box 2a, and codes J an P in box 7. This will result in the $83 of earnings appearing on Form 1040 line 15b and also as an early distribution on Form 5329.
