What's driving this is that you are using the wrong basis when you report the sale.
Since 2014 brokers only have to report your "out of pocket" cost when you sell employer stock, not the correct cost which includes the compensation created by the exercise (NQSO) or sale (ISO) of the stock. So, if you simply enter the 1099-B exactly as it reads and don't correct the basis you're reporting the income twice: once as compensation on the W-2 and then again as an overstatement of gain on the 1099-B.
The correct per share basis to use is the same per share fair market value that the employer used to calculate the compensation. That eliminates the "double income/double taxation" issue. Brokers have learned that they need to educate their customers about the correct basis to use and they typically do that by sending along with the 1099-B some "Supplemental information" that provides the correct basis to use.
The easiest way to handle this is to enter the 1099-B exactly as it reads onto TurboTax's default 1099-B entry form, but then click on the "I'll enter additional info on my own " blue button. On the next page enter the correct basis in the "Corrected cost basis" box. The correct basis is (number of shares sold) x (correct per share basis, which includes the compensation per share)
TurboTax will report the sale on Form 8949 "as reported by the broker" but will put an adjustment figure into column (g) of the Form, a code "B" into column (f) of the Form, and the correct amount of gain or loss which includes the adjustment.
Tom Young
NOTE: TURBOTAX CHANGES THE SECURITY SALES INTERVIEW JUST ABOUT EVERY SINGLE YEAR. THE INSTRUCTIONS ON "HOW TO FIX" THE BASIS REFLECT THE STATE OF THE INTERVIEW FOR TAX YEARS 2016 AND 2017
