"I can't figure out how to record the 1099 so it doesn't double count the income"
You do that by using the correct basis for the sale.
Your per share basis for the stock sold is the sum of:
(per share cost of exercising) + (per share FMV used by the employer to calculate the compensation reported on W-2)
If you think about that a little bit you'll realize that your per share basis is the same as the per share FMV used by your employer.
So, on the 1099-B entry screen enter the 1099-B exactly as it reads, most likely with a basis that reflects only your per share out of pocket cost of exercising. Then click the blue "I'll enter additional info on my own" button. On the next page enter the correct basis in the "Corrected cost basis" box which is: (# of shares sold) x (per share basis).
That eliminates your "double" income problem.
Tom Young
