TurboTax counting my ISO exercise twice after AMT assessment

[CB1406]

I exercised and held a chunk of ISOs in 2018 and the software seems to be counting this action twice. 

I entered the Form 3921 data during the " investment income interview". Later, during the document review step, the software asked me to re-enter this info for AMT assessment purposes. If I then look back at my income summary, the ISO value I entered has doubled. What am I doing wrong?

[TomYoung]

There's two places where you might enter something about an ISO.  The first place is the "ISO Exercise and Hold" interview and the second place is using the "guide me" path within the "Stocks, Mutual Funds, Bonds, Other" interview and if you passed through both entering information about the grant of the ISO twice this could lead to some "over counting."

You should be able to delete the ISO Exercise and Hold information and only use the ISO "guide me" process.  Properly done the AMT should be calculated only on the shares not sold by year end.

Tom Young

[wtwangbu]

I lost an hour for the problem.
Even after I deleted everything under "ISO Exercise and Hold", it still shows the total adjustment amount, which obviously come from AMT section under "Other Tax Situations".

This is confusing and I wish TurboTax can do better than this.

[TomYoung]

The AMT adjustment for shares exercised but not sold is shown on line 2j and is (# of ISO shares exercised in a year but not sold by the end of the year) x (per share FMV at exercise - per share price paid to exercise).  Obviously if you exercised multiple grants during a year you'd have to do this calculation for each grant and add them up.

Within TurboTax the only place that number comes from, unless you enter something directly on the Form it self, is the "ISO Exercise and Hold" interview and the "Stocks, Mutual Funds, Bonds, Other" interview if you choose to use the ISO "Guide me" process.  

First, make your own calculation of what the number on line 2j should be. If it's wrong and you have no entries in the "ISO Exercise and Hold" interview then you've made a mistake in the "Stocks, Mutual Funds, Bonds, Other" interview.  If it happened that you exercised an ISO and then sold some of those shares piecemeal, you can't keep telling TurboTax abount the SAME exercise each time.  TurboTax can't "know" that your referring to the same exercise, it sees them as multiple exercises.  In that case break the exercise into smaller "exercises"; as long as the TOTAL Box 5 amounts add up to the entire grant amount, TurboTax will calculate the adjustment correctly.

[zgoeps]

I am seeing the same issue. Did you figure this out @wtwangbu @CB1406 ? Under the "ISO Exercise and Hold" my AMT Adjustment amount is correct, per me inputting the exercise+holds from form 3921 but yet under my Income Summary it shows this amount doubled, next to the ISO category...?? 

@TomYoung Thanks for anyone's help / input

[TomYoung]

@zgoeps 

This particular subject is confusing within the TurboTax because the interviews aren't as clear as they should be. 

In my post I said:

"Within TurboTax the only place that number comes from, unless you enter something directly on the Form it self, is the "ISO Exercise and Hold" interview and the "Stocks, Mutual Funds, Bonds, Other" interview if you choose to use the ISO "Guide me" process."

So my guess here is that you went through both the "ISO Exercise and Hold" interview for the shares you kept AND went through the ISO guided interview over in the "Stocks, Mutual Funds, Bonds, Other" interview and effectively told TurboTax you had double the number of shares you didn't sell.  So if the gross number of shares exercised was 100, say, and you sold 25, leaving you with 75 shares at year end, then using the "Stocks, Mutual Funds, Bonds, Other" interview where you told TurboTax all about the grant of 100 shares, TurboTax will figure out you've got 75 shares left over and make the Form 6251 entry.  But if, after that, you also go over to the "ISO Exercise and Hold" interview and tell TurboTax about the 75 shares, you've doubled the number of held shares within TurboTax.

[zgoeps]

Hi @TomYoung . Greatly appreciate your time.

Allow me to clarify. In this case, I did visit the "Stocks,Mutual Funds, Bonds, Other" interview and completed it for ISOs exercised in previous years, and for the sale of 2 batches of shares for which I exercised in 2019 and (immediately) sold with a disqualifying disposition. I never entered any information about the other batches of ISOs that i exercised and held in 2019, in this section.

Instead, per your assumption, I added the exercise and hold shares in the "ISO Exercise and Hold" interview. 

Now, back to @CB1406's original post / comment, within the AMT section (i have AMT liability this year due to the exercise and hold) there is a section that asks about uncommon situations, one of which seems to apply to us (the 1st option...) "I exercised ISOs in 2019, but didn't sell the stock in 2019. Or I sold ISOs in 2019 that I purchased in a previous year. Learn more"

When you select this option the next screen asks:

OK, let's get the info for your incentive stock options (ISOs)

If you exercised ISOs in 2019 but didn't sell the stock in 2019, you'll need to enter an adjustment for AMT purposes below. If not, select Continue

Your ISO adjustment is the difference between the stock's grant price and market price on the day you exercised your options. Learn more

If you received Form 3921, it may help you figure your adjustment.

There is a blank area for the ISO adjustment and myself and I assume @CB1406 both re-input our (same) adjustment that we calculated from the 3921 forms...and this seemingly doubles our ISO amount for AMT and under Income. 

So...i chose to leave this last AMT adjustment section blank which seems to yield the correct number now, but i'm concerned that i'm not adding the adjustment per the interview when it seems to clearly apply. 

Thanks again

[TomYoung]

@zgoeps 

Yep, another bit of confusion on the part of TurboTax.  Entering that information, again, in the AMT section is another route to "doubling up" the adjustment.  Removing what you entered in the AMT interview got you to the correct answer.

[zgoeps]

Perfect, thank you! So my approach is correct and won't yield incorrect/inaccurate forms for AMT or otherwise?

[TomYoung]

@zgoeps 

"So my approach is correct and won't yield incorrect/inaccurate forms for AMT or otherwise?

Yes.

But of course, (and this goes without saying, even though I'm saying it anyway), before you send off your income tax return you review all the Forms and Schedules that comprise your income tax return, including Form 6251, and verify that everything's correct.  You know what number should show up in this instance, so make sure it's the number that does show up.

[kjv315]

@TomYoung - Your explanation of this is great! My amount was doubled and I could not figure it out. I checked a few forums and didn't see a resolution, so coming across this today, albeit from 2019, is awesome. Thank you!

[some_user_name]

Wow, the turbotax layout is terrible.  I got caught in the same thing myself.  Thanks forum posters!

[jryn3]

Thank you. This solved my issue.

TurboTax, please fix this issue. It is still an issue 5 years later.