I'm not a Lacerte user so I can't comment on your actual question.  Hopefully a Lacerte user may be able to help you.  In ProSeries, you need to check a box that say it was sold in a "fully taxable transaction" in order to release PASSIVE losses.  But I'll comment on the tax-aspect of things.

If I remember correctly, whether or not you can 'use' Vacation Home carryovers upon the sale is a "gray area" and is an arguable thing, so you may want to research that to see if you thing it should be allowed.

If it is allowed, then as you say, the Basis of the property is reduced on Form 4797 by the carryover amount and the carryover losses should be able to be used.

If it is not allowed, then the Basis of the property should NOT be reduced by the carryover amount an the carryover losses should NOT be used.

It seems like Lacerte is combining it and doing it the worst way by reducing the Basis and not allowing the losses.