Adjusting cost basis for double taxing of cashless exercise for ISO options

[crimson91]

My ISO options vested in 2022, in which I performed cashless exercise in 2022 itself. 

Cashless exercise involved exercising the options at the pre-determined strike price, and selling the stocks at the market price on the same day. For example, on the same day, exercising 100 options of $5 strike price, getting 100 stock shares, and selling them at $10 market price. This resulted in $500 unqualified gains, which will be reported on W-2.

Hence, my gains were already added to my W-2 form, but when I imported the 1099-B form, the cost basis was still my strike price ($5 in the example). I modified the cost basis for each of the imported 1099-B transactions, line by line, to the market price ($10 in the example). This resulted in slight losses due to brokerage fees.

Questions:
1. Should I modify the cost basis of the imported1099-B transactions? Or should I not import the 1099-B, but modified another form like 8949?
2. Is there an updated step-by-step guidance on adjusting the cost basis? The steps were obsolete at: https://ttlc.intuit.com/community/taxes/discussion/turbotax-is-double-counting-income-from-the-sale-...

[DavidD66 · Accepted solution]

The cost basis on the Form 1099-B should be entered as it is reported on the form.  That amount should then be adjusted, by entering your "Adjusted Cost Basis" on the applicable screen in the program.  If this screen isn't available, you may not have indicated the transaction was for Employee Stock - ISOs.  This could be due to importing the transactions.  I have found that the best way to report sales of company stock is to manually input each transaction as opposed to importing them.  If you do it this way, the program will guide you through adjusting your cost basis.