The identity:
$(|Z|^2 - 1)^2 + (2ReZ)^2 = |Z^2+1|^2$
Say $Z = x + yi$
For the left side I simplified to $((\sqrt{(x^2+y^2)})^2 - 1)^2 = ... = x^4 + y^4 + 2x^2y^2 +2x^2 -2y^2 +1$
For the right side I have:
(since $Z^2 = x^2 + y^2$, therefore:)
$|Z^2+1|^2 = |x^2 + y^2 + 1|^2 =...= x^4 + y^4 + 2x^2y^2 + 2x^2 + 2y^2 +1$
Did I do everything correctly? I got $-2y^2$ for the left side, but $+2y^2$ for the right side. That means identity is incorrect?
You're on the right track
We can now compare: $$(x^2+(y^2-1))^2+(2x)^2=(x^2)^2+2(x^2)(y^2-1)+(y^2-1)^2+(2x)^2\\(x^2-(y^2-1))^2+(2xy)^2=(x^2)^2-2(x^2)(y^2-1)+(y^2-1)^2+(2xy)^2$$