I exercised ISOs this year and then sold the shares as part of the company being acquired (privately). The sale price was greater than my strike price; however, when I enter the exercise and sale in TurboTax (Home & Business), it says there was no gain or loss.
To simplify, let's assume I was granted a single ISO on 8/1/2014 (strike price: $10k), exercised on 11/1/2020, and sold (company acquired) on 12/1/2020 for $50k. Because the company was acquired the same year, the 3921 correctly lists the exercise price as $10k and the FMV on exercise date as $50k. I would expect to incur $40k short-term capital gains for the sale.
What I'm doing:
- Stocks, Mutual Funds, Bonds, Other: Click Update
- Click Add More Sales
- Yes, I have a 1099-B and I'll type it in myself
- Box 1c (date sold): 12/1/2020
- Box 1b (date acquired): 11/1/2020
- Box 1d (sale proceeds): 50,000
- Box 1e (cost basis): 10,000
- Box B: Short-term, noncovered (since the strike price is not reported on my 1099-B)
- None of the less common items on the 1099-B apply
- This is employee stock -> ISO, and I sold shares exercised in 2020
- Sale information
- Date sold (box 1c): 12/1/2020
- Number of shares sold: 1
- Total proceeds is $50k - Looks right to me!
- Form 3921
- Date option granted (box 1): 8/1/2014
- Date option exercised (box 2): 11/1/2020
- Exercise price per share (box 3): 10,000
- FMV - exercise date (box 4): 50,000
- Number of shares transferred (box 5): 1
The next screen says I have zero gain from the sale.
It says the net sales price was $50k, with $10k being price paid and $40k being compensation income. This all makes sense to me.
It also says that the cost basis was $50k. But that's not right, is it? I get that the FMV was $50k when I exercised, but I only paid $10k. Why aren't I getting taxed on this difference?
Thank you for your help!
