Does TurboTax really use a cost basis of 0 on Form 8949? That's not what I noticed in my experience, but wow, that's really bad if it does.
Regarding the adjustment amount, I didn't mean you literally get that from your W2. You would have to get this from your brokerage, or maybe you could calculate this based on your company's ESPP plan documents (eg how to handle taxation for qualifying vs disqualifying dispositions) and Form 3922. For example, in my ESPP plan, for disqualifying dispositions (sold < 2 years from subscription date), the ordinary income included in my W2 is the amount of the discount I received on the ESPP shares.
My ESPP plan administrator is E*Trade, and despite having to wait a long time for the 1099's to be downloadable, they provide a Stock Plan Transactions Supplement that includes all the information you need for each sale to enter into TT. In particular, they list the Adjustment Amount (ordinary income reported on your W2), Adjusted Cost Basis, and Adjusted Gain/Loss for each sale. So the (negative) Adjustment Amount given by your brokerage would be what you'd want to enter as the adjustment in that last dialog window. And then you can see if Form 8949 has the correct gain/loss by comparing it to the brokerage Adjusted Gain/Loss.
I've checked the math on this, and I think it works. If others also get adjustment amounts from their brokerages, then maybe they can try this out. But what I was worried about is if the adjustment code is not as expected and whether this raises a red flag at the IRS.
