Bug in the calculation of Net Investment Income Tax (Form 8960) when not itemizing deductions

[Graham B]

The Problem:

When calculating Net Investment Income Tax (Form 8960) TurboTax does not include an investment income modification for state and local taxes paid in Part II box 9b, if you do not itemize your deductions. This results in a tax return that is lower than it should be.

Reproduction Steps:

Setup:

1. Have federal W2 income of $300,000 (any number > $200,000 should work
2. Have state taxes of $10,000 (any non-zero number should work)
3. Have ordinary dividends of $30,000 (any non-zero number should work)
4. Do not punch in anything that would trigger TurboTax to prefer itemized deductions over the standard deduction

Note: I have a turbotax save file reproducing this setup which I can share.

Observation:

1. Form 8960 Part II box 9b is blank
2. Form 8960 Part II box 17 is 1,140.

Expectation:

1. Form 8960 Part II box 9b is 909.
2. Form 8960 Part II box 17 is 1,105.

Note: I can manually trigger TurboTax to properly make this NIIT modification if I force it to make an itemized deduction, rather than than the standard deduction.