When you sell stock acquired via an ESPP that sale can create "compensation" that should be reported on your W-2. The compensation gets added to your "out of pocket" cost in determining the basis of the stock sold.
Since 2014 brokers have had to report only the "out of pocket" cost on a 1099-B, not the correct cost that includes the compensation. But they also, frequently, do know the correct basis and send that information along as "supplement information."
IF all the compensation IS reported on your W-2 then there's no need to use the ESPP step-by-step interview. You can simply use the default TurboTax security sales entry form, entering the 1099-B exactly as it reads, then click on the "I'll enter additional info on my own" blue button. On the next page enter the correct basis in the "Corrected cost basis" box. The correct basis is (number of shares sold) x (correct per share basis, which includes the compensation per share)
TurboTax will report the sale on Form 8949 "as reported by the broker" but will put an adjustment figure into column (g) of the Form, a code "B" into column (f) of the Form, and the correct amount of gain or loss which includes the adjustment.
IF not all the compensation is reported on your W-2 then you probably have to resort to using the ESPP step-by-step interview as that interview, properly executed, will report the "missing" compensation on line 7 of the Form 1040. There can be a problem here, though, if you have both "qualified" and "nonqualified" sales where compensation what not been reported on a W-2. That situation does require some workarounds. I've explained these workarounds in other answers.
Tom Young
NOTE: TURBOTAX CHANGES THE SECURITY SALES INTERVIEW JUST ABOUT EVERY SINGLE YEAR. THE INSTRUCTIONS ON "HOW TO FIX" THE BASIS REFLECT THE STATE OF THE INTERVIEW FOR TAX YEARS 2016 AND 2017
