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Installment sale of ISO

I exercised some ISO in 2016 and paid AMT tax. The company was sold in 2018 on installment sale.  Should I enter the data as normal 1099-B entry where I can specify it is ISO, or jump to installment sale entry where it does not ask me anything about ISO?


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Level 13

Installment sale of ISO

This is a little bit tricky since you did pay AMT and want to try and get some credit for that AMT if possible. 

In a non-installment sale situation you'd use the ISO "Guide me step by step" process to report your sale and TurboTax would make the reversing entry over on Form 6251.

In this case it seems like you have two ways of going:

  1. Assuming you know how to calculate the correct capital gain for the cash received you could use the ISO "Guide me step by step" process, report the correct gain under the installment method each year and TurboTax would make the proper reversing entry on Form 6251.  The sale wouldn't be reported on Form 6252 where installment sales are reported, but as long as your income is properly stated I'd think that's a "style" point, something that the IRS really shouldn't be able to object to. 
  2. The other way of doing this would be to use the Installment Sale interview, report the gain on Form 6251, and then make your own adjustment by passing through the AMT interview and making the correct "negative" adjustment for calculating AMT taxable income.

Tom Young

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