Ii don't think that's my question.  If I enter a negative $300,000 on Sch C and have a negative AGI the diagnostic goes away.  It recognize that I have a 1099R with $125,000 gross and $25,000 withholding and have a negative AGI and thinks everything is find.  Which it always has been in prior year.

My negative $300,000 is coming from a net operating loss from a Form 1041.  Then I get this message.  The diagnostic says income categories.  Somehow the program is differentiating between a net loss from Sch C and from Sch K-1 for the same type of loss.

There should be a way around this.