Form 1045 need help

[ILLMAS]

Hello, I need some help with this form, I have prepared a worksheet to carryback losses, I am having trouble releasing the not allowed losses.  TP sold their building in a short sale taking a 147K loss, based on the TP income they were only allowed a 13K loss:

 

108,000 in wages

-13,000 allowed losses

-9,350 HOH 

85,650 taxable income

Happened in 2016

According to my information, TP has 134,000 losses available, however on form 1045, the available losses is capped at the $85,650.  If I were to overide the loss, then I  would arrive at the 134K, however things don’t work like that and I am trying to figure out if I am really limited to the 85,650?  Any help would be greatly appreciated it.