ISO buy and hold versus short term gain

Forum|Forum|2 years ago
February 27, 2024
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I purchased ISOs, some of which were sold within the same year. These sales are accounted for under my 1099-B as uncovered short term capital gains. I also included these on the comprehensive list of ISO purchases on my Form 3921. Should these ISO purchases be removed from the "ISO buy and hold" entry? When I remove one of the ISO purchases from this section, it reduces my obligation, which leads me to believe that TurboTax is double-counting the purchase and the sale. Note: the proceeds of the sales are also listed on my W-2.

TurboTax Premier Online

ThomasM125

For the shares you bought and sold in the same year, you should not enter those in the "ISO buy and hold" section. There is a note about that in the program when you go to enter them:

Also, you may need to adjust the cost basis reported on your Form 1099-B to reflect the ordinary income associated with the ISO shares as on listed on your W-2 form. Often, the 1099-B will report what the shares cost you and ignore the additional amount of the discount income reported on your W-2 form. If you go through the routine in TurboTax where you let the program help you determine the correct cost basis on employee stock options you should be OK.