Hi Catmom,

After researching this issue, I am convinced that if you elect to treat qualified dividends and/or LTCGs as investment income on Form 4952, the IRS instructions for 2020 tell you to calculate the tax on the Schedule D Tax Worksheet, not on the Qualified Dividends & Capital Gains Tax Worksheet (as in earlier years (before 2020)). As a result, I believe there is a software error in ProSeries so that the software does not use the Schedule D Tax Worksheet. I reported this to Intuit on Thursday 3/11/21. The representative entered a "repair ticket" into their system for the software developers to address the problem. I have not received any communication since Thursday evening and the software is still calculating the tax incorrectly. I will post a message if and when the error is fixed.

In the meantime, I was told to override the tax calculation by going to Schedule D, Line 20, and override the program by putting an "X" in the "No" box. This will force the program to calculate the tax using the Schedule D Tax Worksheet. It is the "brute force" method to get to the correct tax calculation. Not elegant, but it works.