I contacted Lacerte.  We went through the worksheet by Franchise Tax Board.   It was following FTBs instructions.  When you hit sweet spot of 400%, they disregard fed 11D and put zero.  I don't think FTB banked on Fed not taking money back.   FTB has a higher allowance for poverty rate too.  I have returns on hold.  As it is illogical, but it follows the instructions.  This will hurt our clients if we are wrong.