Get your taxes done using TurboTax

Question 1 - No, just report the shares that you sold.  Because you had incentive stock options, you had to report the Alternative Minimum Tax (AMT) adjustment on the bargain element which was the difference between the price you paid for the ISOs and the fair market value of the stock.  At the time you reported the AMT adjustment (which applies if you buy the shares and hold them over year-end) if your income was over a threshold amount based on your filing status, you would have been required to pay the AMT tax.  However, if your income was below the threshold, then no AMT was due.  

Question 2 - We will need additional information from you regarding the adjustment you made to the cost basis.  Ordinarily, you would report what is on your Form 3921 as that information is also reported to the IRS.  If an amount is incorrect on Form 3921, we usually advise customers to request from their employer an amended Form 3921.  However, if you are unlikely to get an amended Form 3921, you can report the amount on your Form 3921 as is, but then enter an adjustment in TurboTax to reflect the price you actually paid for your ISOs.  Keep your records in the event you have to substantiate the reasons for any adjustments.

To report your sale of the ISOs in TurboTax CD/download follow these steps.

1. Select Personal then Personal Income
2. Scroll down the screen to Investment Income and select the Stocks, Mutual Funds, Bonds, Other
3. Enter your information.  After passing through a few screens, you will see the screen, Was this a sale of employee stock?  Select Yes.
4. On the next screen select ISO.
5. Continue to enter your information about your ISO sale.  You will see the screen, Enter Your Purchase (Exercise) Information.  TurboTax needs this information to know how to characterize your sale i.e., short-term or long-term.
6. After entering your information, the last screen you should see, Select any less common adjustments that apply, is where you can enter any adjustments that have not been previously entered.  

In TurboTax online, the process is somewhat different in that that are fewer screens to review.  For example, on the screen, Now enter one sale on your [brokerage name] 1099-B, is where you will enter the type of investment, the dates of acquisition and sale, ISO proceeds, cost basis, and you will also indicate (by checking the appropriate box) whether your cost basis is incorrect.  If the cost basis needs adjustment, on the following screen, you will enter that adjustment. 

@Annie2023