How do I enter the information in a 1099-B and 3921 for a cashless buy and hold ISO exercise? I'm using TurboTax Premier.

[mgbures]

I sold just enough shares to cover the cost of buying the stock. The 3921 has the total number of shares in the option as the number of shares transferred. However, the number of shares I'm holding is the number of shares in the ISO grant minus the number of shares to cover the cost of buying the shares. Also, it seems like the fair market value of the shares, on the data I acquired them, will be used to calculate my AMT. As such, it looks like I will owe a large amount of AMT (about an additional $40,000). Can I send a payment to the IRS to cover the additional tax and avoid a penalty? I have already sent my quarterly estimated tax payments for 2018.

[TomYoung · Accepted solution]

You should be able to simply use the ISO "Guide me step by step" process here.  You'll enter the full amount of the grant, you'll tell TurboTax how many shares you sold, TurboTax will calculate the AMT adjustment for the grant shares not sold.

Simply owing a ton of money to the IRS when you file your income tax return doesn't mean you're subject to a penalty.  As long as the sum of your withholding and estimated taxes paid for the tax year gets you into one of the "safe harbors":

The lesser of
       a)90% of the tax for the current year, or
       b)100% of the tax shown on the return for the prior year.  (If last year's return shows AGI over $150K (for married filing jointly) then change that "100%" figure to "110%.)

then you will not be assessed an underpayment penalty.  If you think you won't get into any of the safe harbors then an earlier payment should be helpful either eliminating or at least minimizing any underpayment penalty. 

Tom Young