"...the difference between the option price and the fair market value on the grand date should be the compensation element, and the cost basis adjusted to reflect that."
Not necessarily. With a qualifying disposition the compensation/basis adjustment is the lesser of:
- the discount allowed on your purchase, determined as of the "grant date"
- your profit from the shares (selling price minus what you paid for the stock)
In my experience TurboTax does make these calculations correctly though I'll add that I haven't actually done a test entry into the 2019 program.
