Dan, I agree, the CA Form 3804-CR, Part II, Line 4 is incorrect, it should equal the Form 540 Line 44 PTE credit. Spidell weighed in on my fact pattern and they agree there should be a PTE credit carryover. 

I spent about 2 hours on the phone with Proseries technical, they reviewed the return and believe the software works fine. Their solution is to change the PTE credit input on the K-1 to equal the lesser amount of Form 540 PTE credit. Not a good idea since the taxpayer's PTE credit carryover would be zero and incorrect.  

I asked Proseries to change the 3804-CR, Part II, Line 4 and 5 so we can correct the amounts with Overrides, they refused to escalate the matter and they won't do anything to resolve this problem. 

Very frustrating to pay so much $ to Proseries and we're talking to a wall.