Live in Virginia; earned Schedule K-1 business rental income in North Carolina; Do I file a NC return with the K-1 and claim the K-1 on Virginia return?

Yes, you will need to file a nonresident North Carolina state tax return to report the income from the NC Schedule K-1. TurboTax will transfer the federal Schedule K-1 information to each state return, including North Carolina. Any adjustments needed will come from the NC Schedule K-1.