Is that the "I got what would have been an amended K-1 under the old rules" form? Indeed! Worst form ever.

The diagnostic says pretty clearly that Lacerte doesn't support the form in a way that will pass the IRS e-file specs. If the IRS check is [if Form 1040 Line 16 Box 3 includes "FORM 8978" then the xml must include a Form 8978], then the return will reject at the IRS level. If you change that notation, the return will look like you ignored the 8978 tax and like your client was agreeing to owing some entirely different type of tax.