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How and where do I enter Form 3921 for Exercise of Incentive Stock Option under 422(b)? Listed is # of shares, exercise price and FMV.

Level 1
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2 Replies 2
Level 15

Exercise of ISO is not taxable for regular tax but subject to AMT.  You will enter the bargain element as taxable income for AMT under Taxes > Alternative Minimum Tax (6251).

Make sure you keep track of this as you'd need to adjust the AMT basis for capital gain/loss in the year of disposition.

In the old days, ISO often triggers AMT, which would give rise to MTC in future years but this is less likely now after TCJA.

Still an AllStar
Level 3

You raise a great question since there are no worksheets in PTO to enter this information, yet there are the following worksheets in ProSeries:

  • Employer Stock Transaction Worksheet
  • Summary of Compensation Income From Employer Stock Transaction
  • Exercise of Stock Options Worksheet

These very useful worksheets allow you to reconcile all of your stock compensation transactions to the amounts in Box 14 of Form W-2.  They allow you to keep track of all stock compensation that vested or was exercised, but not yet sold in the current year.  These worksheets are really helpful, yet, they are REALLY missing from PTO...sadly.

To make Schedule D/8949 work in PTO, you have to calculate your Column G Amount of Adjustment outside of the program, instead of inside the program like you can do in ProSeries.

Interesting that they keep forcing us to migrate to PTO, yet PTO is not even fully functional.

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