My NJ state return is showing a gain on the sale of a rental property but it is not deducting all my prior year losses. Am I doing something wrong?

[SweetieJean]

New Jersey and Federal depreciation and expense deduction limits are different. A New Jersey depreciation adjustment may be required for assets placed in service on or after January 1, 2004. 

If you sold an interest in a rental property, you may be required to use a New Jersey adjusted basis. 

There is no distinction between active and passive losses for New Jersey purposes. You cannot carry back or carry forward such losses when reporting income on Form NJ-1040. You can deduct Federal passive losses in full in the year incurred against any gain within the same category of income, but only in the year that it occurred.

http://www.state.nj.us/treasury/taxation/pdf/current/1040i.pdf