TT is not including closing costs and capital improvements in the calculation of my basis for a rental property. Why is this happening and how can I fix it?

You have the option to include closing costs and improvements in the fair market value of a rental property converted from personal use. Or you can enter the improvements as a separate rental asset. 

Note that a fair market valuation usually includes any improvements made to the property since it was purchased. You may wish to obtain a better valuation from a real estate professional who is familiar with properties in your area.