Reporting the sale as an installment sale is correct in very many instances and presumably the facts and circumstances of the sale dictate that treatment.
I don't know if you were subject to AMT due to the previous instances of "exercise and hold". If you were not then life gets a lot easier.
The following interview path does appear to properly report an installment sale:
Begin the Installment Sales interview under the "Less Common Income" section
Answer "Yes" to the question "Do you want to report an installment sale?"
On the "Property Description" page enter "Description of Property Sold", "Date you Acquired This Property", "Date Your Sold This Property"
On the "Sales Information" page enter "Selling Price", "Sales Expenses" and "Cost or Basis"
On the "How Was This Item Used?" page answer "No"
On the "Sold Stock" page answer "No"
On the page "Collectible" answer "No"
On the page "Passive Activities" answer "No"
On the page "Debt Assumed by Buyer" enter the appropriate amount ($0, I assume)
On the page "Principal and Interest Received" enter the appropriate amounts
On the page "Depreciable Property" answer "No"
On the "Related Party Sale" page answer "No" (I assume)
Please let me know if it works for you. I'm trying to get a "critical mass" of users that need this functionality in order to persuade TurboTax that their programming is wonky here.
If you were subject to AMT due to previous exercise and holds then you certainly want to get the "reversing" entry properly place on Form 6251. In that case I'd say that the first thing to do is to enter the trades using the "ISO step by step" interview in order to calculate the correct amount of the Form 6251 reversing entry. You certainly can enter the "escrow amounts that were withheld" because you start the process of reporting a sale simply by telling TurboTax the amount of proceeds "received" by including the escrow amounts to the cash actually received. Doing so will caculate then correct Form 6251 reversing entry.
After getting that reversing entry amount and recording it somewhere, and noting what line it shows up on, (line 17), delete the trades and then go enter the trades using the work-around installment sales method outlined above. Then go into the AMT interview and simply tell TurboTax the amount of reversing entry needed.
I honestly don't know if the reversing entry would be reported "as if" all the cash was received upfront - that is, in the same amount as you recorded from your use of the ISO step by step interview as outlined in the paragraph above - or if you would "trickle it in" as cash was received. My instinct is that the latter method is correct but as I said I really don't know.
Tom Young
