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ISO buy and hold versus short term gain

I purchased ISOs, some of which were sold within the same year. These sales are accounted for under my 1099-B as  uncovered short term capital gains. I also included these on the comprehensive list of ISO purchases on my Form 3921. Should these ISO purchases be removed from the "ISO buy and hold" entry? When I remove one of the ISO purchases from this section, it reduces my obligation, which leads me to believe that TurboTax is double-counting the purchase and the sale. Note: the proceeds of the sales are also listed on my W-2.

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2 Replies
ThomasM125
Expert Alumni

ISO buy and hold versus short term gain

For the shares you bought and sold in the same year, you should not enter those in the "ISO buy and hold" section. There is a note about that in the program when you go to enter them:

 

 

Also, you may need to adjust the cost basis reported on your Form 1099-B to reflect the ordinary income associated with the ISO shares as on listed on your W-2 form. Often, the 1099-B will report what the shares cost you and ignore the additional amount of the discount income reported on your W-2 form. If you go through the routine in TurboTax where you let the program help you determine the correct cost basis on employee stock options you should be OK. 

 

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ISO buy and hold versus short term gain

Thank you, @ThomasM125! This is exactly what I needed to know. This reduced my tax bill by 10%. A huge help.

 

Note: I am using the online version and did not receive the prompt in the first screenshot you posted, which makes sense why I was unclear.  

 

Many thanks.

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