How to enter an adjustment for ISO sale on California taxes

[ajayka]

If I sell ISO shares (which is a qualifying disposition), I can enter the correct AMT basis by entering the difference between the AMT gain and Regular gain through:

Personal -> Other Tax situations -> Alternative Minimum Tax (AMT) -> "I exercised ISOs in 2024... Or I sold ISOs in 2024..." -> Skip "Enter your ISO adjustment" -> "Enter the amount of your ISO adjustment that was a long-term capital gains/losses

Doing this allows TurboTax to correctly fill in Form 6251 2k (Disposition of property). When I start my California taxes, I would expect TurboTax to also fill in Schedule P(540), line 9: Adjusted gain or loss but it does not which results in a much higher California tax. 

How do I get TurboTax to do this or do I need to do a manual override?

Also if the AMT gain is a loss, TurboTax will correctly carryover the loss for the next year. But it does not do this for California which means taxpayers may end up paying higher California taxes next year.

[ajayka]

I figured this out. This is a bug in TurboTax (at least on the desktop version) as it does not transfer the ISO adjustment to California tax return (It should have transferred Form 6251 line 2k to California Schedule P (540), line 9). The workaround is to switch to the Form mode and enter this manually on California Schedule P (540), line 9

You also need to keep track of your California AMT capital loss carryover for the next year. Again TurboTax does this for the federal return but not for California.