How to handle '1099-B worksheet line 18 column e should not be more than the FMV/share on exercise date' error

[JTAIW]

This is the error I get when doing the review of my Fed taxes. It seems that TT cannot handle the fact that the actual sale price for one lot of my NQSO was $19.97 which is indeed lower than FMV (used to report income on Box 1 of my W-2) which was $20.59.  

Would appreciate any help fixing this issue.

Thx.

[GeorgeM777]

One option would be to report this sale as a simple sale of "plain-vanilla" stock, stock that's no different than a stock you bought through your broker (as long as you know or can determine your correct cost basis which it appears that you do). 

After entering the 1099-B, answer NO to 'is this employee stock ' which will avoid having to enter vesting info, stock sold for taxes, etc.  Moreover, the amount of the spread at exercise of the NQSO has already been included on your W-2 and reported to the IRS by your employer. 

@JTAIW

[JTAIW]

Thank you very much. That indeed gets rid of the "error" when doing the federal review.

But it doesn't seem to fix the fact that the numbers still do not match with those provided by E*Trade in the Stock Plan Transactions Supplement because the "loss" (due to the difference between the FMV and the actual sales price) is still not be included by TT as part of the compensation income. 

[MarilynG1]

No, the difference between FMV (when vested) and Sales Price, is reported as Capital Gain/Loss, not as compensation income.

The compensation income reported on your W-2 is the difference between what you paid for the stock (a discounted employee price) and the FMV when you took possession of it (vested).

That's considered 'wages' to you; two entirely different things reported in two different ways.

[JTAIW]

Thank you for your response.

These transactions are NQSO exercised as 'same-day-sale' not ESPP. If the Sale Price (the price the NQSO were actually sold) is more than the Exercise Market Value/FMV (price of the stock at the end of the day the day), TurboTax treats it rightly as Compensation Income which is included in W2; if the Sale Price is less than the Exercise Market Value/FMV, TurboTax treats this as Loss but not part of Compensation Income. Because E*Trade reports both gains and losses in Box 1 of W-2, but TurboTax reports only gains, we cannot reconcile how TurboTax treats these transactions with the Stock Plan Transactions Supplement provided by E*Trade.