If you exercised ISOs and sold them in the same year at price below the fair market value of the stock on the date of exercise, but above the exercise price, then you have ordinary income equal to the strike price plus the bargain element - which is also your cost basis. You also have a short term capital loss equal to the cost basis less the sales proceeds. Your 1099-B is probably wrong - brokers don't include the bargain element in the cost basis. You will have to adjust it. To do so, go to:
- Federal
Taxes
- Wages &
Income
- Investment
Income
- Stocks,
Mutual Funds, Bonds, Other
- Answer Yes you received a 1099-B
- Do not enter your
broker-dealer name and download your 1099-B, instead,
- Click on "I'll type it
in myself"
- Enter your Broker and click Continue
- Indicate the type of trades
you have on your 1099-B (A, B, D, E, X)
- Enter the details of your
transactions as reported on your 1099-B THEN
- Check the
Box for "This sale
involves an employee stock plan (including ESPP) or an uncommon situation". Additional
information will appear. Click on Start Now
- Indicate "I have sales
from an Employee Stock Plan, including ESPP, NQSO, ISO, RS, and RSU"
- Follow the instructions for
the type of employee stock plan you have. Additional information on
these plans is available by clicking the blue Learn More link
