How to properly report ISO's excercised in a previous year but partially sold in the current tax year?

[alexander36]

In 2020, I early exercised 'A' shares of a company for which I was granted equity on a vesting schedule by filing an 83(b) Election with the IRS. I reflected this in that years tax return and was taxed accordingly. I left the company in 2021, and the company repurchased the portion of the shares ('B') that I had not vested. Note that I still retain some amount of shares in the company ('A'-'B'). I have reported the repurchased shares as investment income in my 2021 tax returns (1099-S as I did not receive a 1099B). My question is, in the "ISO Excercise and Hold" section of Turbotax, do I still need to declare the ISO stock that I still hold for the current tax year (2021), or did I only have to declare the ISO's at the time of early exercise (i.e. 2020). Furthermore, if the former, do I have to declare the ISO's that I hold every year or only in the years where their is of a partial or complete sale? Thanks!

[RaifH]

No, you do not need to report the held ISO stock again in 2021 as long as you did not exercise more shares. You only had to claim the ISO stocks that you held in the year that you exercised the options. You may have had to pay the alternative minimum tax in the year that you exercised them. If your 2020 tax return includes Form 6251 and an amount on Schedule 2 Line 1 then you paid alternative minimum tax in the year of exercise. 

If you paid alternative minimum tax in 2020, you may have gotten a credit for the tax paid. You can carry that forward this year if you are eligible to claim it on Form 8801. You can visit this section on your 2021 return in Federal > Deductions & Credits > Estimates and Other Taxes Paid > Credit for AMT Paid in Prior Year. 

For more information on the taxation and reporting of ISOs, see this TurboTax article. 

[alexander36]

Thanks so much!