Actually you do need to report the exercise of ISO stock if you did not sell all of the stock before year end, and you do that by entering Form 3921 into TurboTax. The interview you need is the "ISO Exercise and Hold" interview that's in the "Investment Income" section. That's where you'll enter your Form 3921 and that's where TurboTax gets its information for the AMT adjustment.
After entering all your other income/deductions/credits information cruise through the "Alternative Minimum Tax" interview that's under the "Other Tax Situations" tab. If you sold some or all of the stock then you can use the Form 3921 to help determine the basis of the stock when you enter the sale via the "Stocks, Mutual Funds, Bonds, Other" interview.
So, enter the Form 3921 if you didn't sell all the stock by year end using the "ISO Exercise and Hold" interview. You can enter the Form 3921 if you sold some or all of the stock during the year and use the ISO "guide me" stock sale interview. Alternatively, if you know the correct basis to use for the sale - which is not the amount reported by the broker on the 1099-B - then you don't need to enter the Form 3921; you simply enter the 1099-B as it reads and then tell TurboTax you need to correct the basis.
Tom Young
