How do I recognize AMT tax credit from sales of ISO that I sold in 2018 but exercised in 2011?

[GeorgeM777]

If you are using TurboTax online you will not be able to view Form 6251 during the preparation of your return.  In TurboTax online, you can select Preview my 1040 to view your Form 1040 and if applicable, Schedules 1, 2, and 3.  You click on Back in order to return to the step-by-step preparation of your return. 

Your ISO information is entered in the Investment Income section (TurboTax online version).  In the Income & Expenses section, scroll down to Investment Income, and click on the drop-down arrow to show more options.  Select Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B) and answer the questions when prompted.  There will be a page which references ISO type transactions.  

If you are using TurboTax desktop, the process is essentially the same.  After selecting Stocks, Bonds, Mutual Funds, in the Wages & Income section, enter any relevant information.  You may see a page where you can enter information about a specific stock purchase and sale.  Click continue, and then the next page will inquire about less common items.  Click continue, and the next page will ask about ISO purchases and sales.  

@tb26

[tb26]

GeorgeM777 said - "There will be a page which references ISO type transactions."  

This doesn't seem to be working. On the 1099-B page you can select the type of sale as ISO and enter all the details from the 1099-B form. But when you hit 'continue' it takes you to a page title "Adjust your cost basis to ensure your best outcome". There isn't a page which references the specifics of the ISO transaction such as the date the options were granted (needed to determine if you are >2 years from grant date) and the FMV on the date of exercise (need to compute AMT cost basis). 

[GeorgeM777]

We need to modify the previous response regarding where to enter your ISO information.  The starting point is not Stocks, Cryptocurrency, Mutual Funds, Other, but rather ISO Exercise and Hold in the Investment Income category.  

In an earlier post you mentioned that you were not able to see the question "Did you sell ISOs in 2021 that you purchased in a previous year?"  After selecting ISO Exercise and Hold, we continued through the application and did see the question regarding the sale of ISOs in 2021 that were purchased in a previous year.  That question appeared after the page that asked about less common situations.  Included below are the relevant screens.

@tb26

[tb26]

Thanks. I don't see this screen. I'm thinking it's because I don't owe any AMT. So a negative adjustment to AMT income doesn't matter. If I did owe AMT maybe it would show?

[JulieS]

Here is how to find those screens in TurboTax:

1. Open your tax return.
2. Select Federal on the left.
3. Select Other Tax Situations, toward the top center.
4. To the right of Alternative Minimum Tax (AMT), select Start or Revisit.
5. Answer the question Yes and Continue.
6. On the question, Do you have any of these uncommon situations? select the first option. 
7. Fill in the information as shown above.

[tinavo2020]

Hi,

I have similar scenario that I exercised the held ISO shares in 2016.  I paid AMT in 2016.  I sold all these shares in 2021.  I followed "Guide me step by step" interview and entered all the information on form 3921.  However, TurboTax did not adjust the cost basis, and this inflated my realized gain in 2021.  What other steps should I do?

Thank you.

Tina

[GeorgeM777]

The starting point for entering your ISO sale information is the subsection ISO Exercise and Hold in the Investment Income category.  If you started in that subsection, you should have seen the page with the question "Did you sell ISOs in 2021 that you purchased in a previous year?"  That question appeared after the page that asked about less common situations. 

The page "Did you sell ISOs in 2021 that you purchased in a previous year?" is where you can enter your AMT adjustment, which is referred to as a negative adjustment. 

@tinavo2020

[johntan894]

I finally figured this out. For those of you who couldn't get it to work with the suggestions above, try this:
1. Go to Wages & Income > Investment Income > Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B)
2. Add the stocks you sold in 2021 that were a result of prior year ISO exercises
3.  Under the Sales Info > What type of investment did you sell? Select "Incentive stock options (ISO)" (This doesn't make sense cause you're not technically selling ISOs. It's just bad copy on the UI <- feedback)
4. Click continue and select "none of the above applies"
5. It'll go through the "Next, we'll help you figure out your cost basis" flow
6. Add the # of shares you sold and fill out the 3921 form info (e.g. strike price, FMV, date of exercise, etc.)
7. Hit done and now Turbotax is able to connect the dots for your prior years exercise with the current tax year sale. You should see your AMT tax credit applied correctly now.

[tinavo2020]

Thank you very much for this detailed note.  It works.

[vv123]

It looks like this no longer works. Has TurboTax changed their UI again?