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03-31-2015 12:55 PM - edited 03-31-2015 05:31 PM
02-07-2016 12:07 PM
The title of the form 3921 is "EXERCISE OF AN INCENTIVE STOCK OPTION UNDER SECTION 422(b)"
It is not the sale of the stock. That is a seperate transactions.
You enter the net unrealized gain on line 14 of form 6251.
The IRS instruction for Form 6251 shows the following
Line 14—Exercise of Incentive Stock Options For the regular tax, no income is recognized when an incentive stock option (ISO), as defined in section 422(b), is exercised. However, this rule does not apply for the AMT. Instead, you generally must include on line 14 the excess, if any, of: 1. The fair market value of the stock acquired through exercise of the option (determined without regard to any lapse restriction) when your rights in the acquired stock first become transferable or when these rights are no longer subject to a substantial risk of forfeiture, over 2. The amount you paid for the stock, including any amount you paid for the ISO used to acquire the stock. Even if your rights in the stock are not transferable and are subject to a substantial risk of forfeiture, you may elect to include in AMT income the excess of the stock's fair market value (determined without regard to any lapse restriction) over the exercise price upon the transfer to you of the stock acquired through exercise of the option. You must make the election by the 30th day after the date of the transfer. See Pub. 525, Taxable and Nontaxable Income, for more details. If you acquired stock by exercising an ISO and you disposed of that stock in the same year, the tax treatment under the regular tax and the AMT is the same, and no adjustment is required. Increase your AMT basis in any stock acquired through the exercise of an ISO by the amount of the adjustment. Keep adequate records for both the AMT and regular tax so that you can figure your adjustment. See the instructions for line 17. Form 3921. If you received a Form 3921, it may help you figure your adjustment. Example. You exercised an ISO to acquire 100 shares of stock in 2015. Your rights in the acquired stock first became transferable on the date you exercised the ISO and were not subject to a substantial risk of forfeiture. You did not pay anything for the ISO. You did not sell the acquired stock during 2015. You received a Form 3921 that shows $10 in box 3 (the exercise price you paid for each share), $25 in box 4 (the fair market value of each share on the exercise date), and 100 shares in box 5 (the number of shares you acquired). To figure your adjustment, multiply the amount in box 4, $25, by the 100 shares in box 5. The result is $2,500, the fair market value of all the shares. Then multiply the amount in box 3, $10, by the 100 shares in box 5. The result is $1,000, the amount you paid for all the shares. Your adjustment is $1,500 ($2,500 − $1,000). Enter it on Form 6251, line 14.
03-06-2016 01:43 PM
Form 6521, Line 14 says it carries from the Incentive Stock Options worksheet,
but I can not find that in my 2015 Deluxe edition.
There is a note there about upgrading to Premium - do I have to just override line 14 in Deluxe?
01-14-2017 02:32 PM
Thank you so much for this concise and detailed answer. It helped me with a form 3921. I knew the difference in the ISO price and the FMV, when the employee exercised the option, was not a gain to be reported on a schedule D but an AMT issue. I just didn't know where to report the change.
01-25-2017 11:02 AM
After reading this thread, it is still unclear to me where to enter in my form 3921 in my online taxes. I am using the Deluxe version. Please advise exactly which page this information needs to be input.
02-05-2018 02:58 PM
I have a slightly different question with the handling of this form, the data and actual events. I exercised - bought my shares and in the same year, the company was sold and I received ZERO dollars or value from the transaction. A complete loss. How do I handle that?
I was going to use my cost basis as a loss, but when I received this form, it shows there was some value at the time of exercise, but in two short months later all value was lost. If I don't have to show AMT because it was in the same year, do a show the loss of the adjusted value (Cost Basis - Fair Market Value) as my loss?
It kind of feels that I should only write off the cost basis as a lost, because everything occured in the same tax/calendar year.
Any guidance would be helpful.