How do I use LT capital loss carryover to offset capital gains on an Arizona 140NR Return?

[Veehb]

I live in Utah and have a 1040 long term capital loss carryover, none of which is from Arizona income sources.  I have an Arizona K-1(NR) from an Arizona investment partnership with a 1231 gain of about 4,000 (line 11) and a loss of -830 from rental income (line 2).  There is also a business expense deduction of 640 (line 16) (2% floor business deduction -- I have enough business expense deductions on my 1040 to get above the 2% floor).  

My long term capital loss carryover is about $19,000, all from non-Arizona sources.  Can I use it to net out the Arizona capital gain income?  If so I have no Arizona income to report.  If so, do I still need to file the Arizona 140NR?  Netting this out will result in a net loss from this investment.  I pay no 1040 income tax on this investment.

Help or suggestions greatly appreciated!

[JimW1 · Accepted solution]

Since the long term capital loss carryover is from non AZ sources, you can't use it to offset your AZ capital gains.

All of your capital gains/losses will be entered on a worksheet for AZ. You get to this worksheet during the Arizona interview by answering "Yes" to the question "Any Other Subtraction Adjustments?" and then answering "No" to "Other Subtraction Adjustments".

On the screen titled "Net Long-Term Capital Gains", you will see the capital gains worksheet shown below. On this worksheet, there are 4 columns. Column a is calculated based on entries on your federal return. For any calculated value in column a, enter the amount that applies to AZ in column b. Then, in column c, enter the amount from column b that was from assets acquired before January 1, 2012 and in column d, enter the amount from column b that was from assets acquired on or after this date.

[Veehb]

Thanks TurboTaxJim.  You answered my question and helped me understand how to enter the data.   I fought the 140NR return for an hour or two and found the instructions pretty useless to enter data from two K-1s.  
I finally bought the Turbo Tax Arizona state software, hoping it would make it easier.   Hit a few snags. Your explana of the table really helped.  That return is not easy.  Not apparent how it manipulated the capital gains between the federal and state returns.
 No way to enter the 2% floor business expense deductions.  I had to make my own schedule to enter them as partnership adjustments. All that in half a day and $50 for the software to pay $16 in Arizona taxes!  
I had to file extensions as I'm still waiting for a couple of K-1s to come in.  But, I had to know how much tax to pay with the extensions.
Do you work for Intuit?  The state returns need some work!
Q
Thanks for your timely and helpful reply!