Where to I enter incentive stock options that are exercised and held?

[RayW7]

If you exercise ISO's and do not sell any the stock acquired by 12/31 of the year of exercise then you need to enter the exercise using the "ISO Exercise and Hold" interview.  Your "source" document for this should be Form 3921 provided to you by your employer.

1. In TurboTax go to 

2. Personal

3. Personal Income

4. Investment Income

5. ISO Exercise and Hold

-follow these link(s) for additional information-

Incentive Stock Options - TurboTax Tax Tips & Videos

About Form 3921, Exercise of an Incentive Stock Option Under ...

[dphillied]

Hi. Specifically which versions of TurboTax for 2021 support the calculation of AMT owed (if any) for ISOs exercised but shares not sold in the same calendar year? I believe that to do this you need support for Line 2i of

IRS Form 6251. Is that level of support available in Deluxe, or do you have to purchase Premiere for that? Thanks

[Critter-3]

Deluxe has that form. 

[Brent_B10]

I have a related, follow-up question.  I exercised and held ISOs in 2021.  I entered the details in the Wages & Income section and it calculated an AMT adjustment of $60K.  Then when I go through the Other Tax Situations it asks 'Do I have any of these uncommon situations?' and 'I exercised ISOs in 2021, but didn't sell the stock in 2021. Or I sold ISOs in 2021 that I purchased in a previous year' is the first checkbox.  If check this box and enter the $60K in the ISO adjustment box, it appears to double my AMT adjustment to $120K.  It seems like this is duplicating the amount and significantly increasing my tax due.  Can you please advise?

[GeorgeM777]

While responding to the Other Tax Situations questions relating to your ISO exercise and hold may seem to be duplicating information that has already been entered, you are correct in that those additional responses should not result in a doubling of the AMT adjustment.  Because it appears that you may be using the desktop version of TurboTax, when you switch to the forms mode, can you confirm that the Exercise Stock Options Worksheet contains an AMT amount of $120,000 and an AMT Adjustment in the same amount.   

@Brent_B10

[Brent_B10]

Thanks for the reply.  I'm using the online version so I'm not able to see the forms while still working on my return.  I found a couple other threads on this topic from previous years and those suggested to just leave AMT adjustment amount blank in the 'Other Tax Situations' section.  Does that sound right?

[AmyC]

You should not be in that section. The 3921 information will flow through so that the 6251 is handled by the program. Please see my answer below.

Edited 3/4/2022 (11:15am PST)

[Brent_B10]

Thanks.  It's especially confusing because on the next page it says:

"If you exercised ISOs in 2021 but didn't sell the stock in 2021, you'll need to enter an adjustment for AMT purposes below. If not, select Continue."

This really makes it seem like I should enter an adjustment amount if I exercise and didn't sell.  Am I completely misinterpreting?

[AmyC]

I am sorry! I was! Let's go back through the entry.

1. Federal
2. Income
3. Investment Income
4. ISO exercise and hold, edit/ update
5. Edit, enter job and owner
6. continue
7. Yes, have 3921, enter information
8. done
9. ISO Purchase Summary and AMT adjustment amount show there, that is carried by the program to the 6251 and on the Exercise SO worksheet showing AMT

On the worksheet, Line 2i ISO  calculations- line 3 has the number just shown at the ISO summary screen. Line 4 other ISO is the same number as the adjustment on the  6251 screen where you are with the value differences.

The program is carrying information and handling it all for you. You do not need to go into the Other Tax Situations, AMT area at all. If you go in there, the program has the ISO adjustment from your 3921 information. You do not want to mess with those numbers. Delete the form and let the program repopulate it correctly. Go to tax tools, tools, delete a form, delete 6251. The program will repopulate it correctly now.

[Brent_B10]

Thank you so much. If I just uncheck the box in the Other Tax Situations and make sure the AMT adjustment is blank, do I need to delete the form?  By doing this (without deleting the form), my ISO Exercise and Hold looks correct so I think I'm good, right?

[AmyC]

You should have the 6251 showing your ISO. If it is correctly showing the information, great -stop reading or doing anything ISO related.

If not, then delete 6251 so the program can repopulate it correctly. The program won't actually delete the form, it just fills it right back in again, with the information from the 3921. The program holds on to important information. No, I don't want you to uncheck the box. It should have been already checked from the 3921 entry. It is a question of just not going into that section until you sell and need to add that negative amount. 

You should be paying AMT on the ISO just not regular income tax. When you sell the stock, you will have a different basis for AMT. Then, you will need to adjust your AMT basis due to this year.