TurboTax considers your situation out-of-scope. Here is what it says in the Out-of-scope article:
"Taxes not covered elsewhere 1. Form 1099-Misc and Non-Qualified Deferred Compensation: If your Form 1099-Misc has an amount in box 15b for nonqualified deferred compensation plans under code section 409A, see 16 IRS Publication 15-A for the calculation of the additional tax that must be reported on Form 1040."
In Publication 15-A the IRS has this to say about taxes on Nonqualified Deferred Compensation Plans-
"Section 83(i) election to defer income on equity grants (qualified stock).
An arrangement under which an employee may receive qualified stock (as defined in section 83(i)(2)) isn’t treated as an NQDC plan with respect to such employee solely because of such employee’s election, or ability to make an election, to defer recognition of income under section 83(i)."
You should read that whole section.
At any rate, I read that as this income doesn't require you to be subject to FUTA taxes so you should remove it from the 1099 and enter it under miscellaneous income with a description that says "NQDC ESPP" or something like that. The amount will match your 1099 and should satisfy the IRS and it will go ahead through the program.
@Gd2
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