I exercised ISO shares selling shares in order to buy shares same day and didn't receive any cash - just sold enough shares to buy shares. The proceeds were included in my W2 as income in box 1, so I have to pay ordinary income tax on that money. But, I also received a 1099B from the brokerage and when I enter that into TurboTax for the ISO's, it looks like I'm being taxed a second time on the capital gains for the same amount I was taxed on my W2. What do I do?
When you enter the information for the sale of the stock, in the Investment Section of TurboTax, your basis in the stock is the same amount as the proceeds you received. This shows that there was no gain/loss on the sale of the stock.
The information needs to be reported in both sections of TurboTax.
Thanks, Diane. The cost basis on the 1099B shows as $30k (just rounding to make this simple). The Proceeds are showing as $80k, so technically, a capital short-term gain of $50k. The income being reported on the W2, related only to the ISO sale, shows as $50k. I essentially exercised 3,000 ISO shares selling 1,300 of these shares in order to buy the remaining 1,800 to hold. The broker sold just enough to cover the price of buying 1,800 shares for me to hold and the Fed and States taxes due. In addition to the taxes I've already paid on the W2 income of $50k, do I also have to pay Capital Gains tax on the exercise of these options?