ISO Exercised - Taxable to PA?

Forum|Forum|2 years ago
April 6, 2024
1 reply
8 views

I have a client who exercised some ISO in 2021. Reported the income for AMT purposes only. My client was going to exercise additional ISO in 2024 but was given a form for PA withholding. After doing a bit of research, it appears that PA taxes the ISOs when exercised and does not follow Fed law.
(a). Can someone confirm the PA taxes the exercise of ISOs?
(b) If PA does tax the exercise of ISOs, how would I reflect this in Lacerte as typically the ISO is input into the AMT field. Maybe I input in "Dispositions" and mark the box "nontaxable to federal"? (c) Finally, I would presume that I need to keep a basis record now for AMT and for PA purposes?

Thanks in advance.

This topic has been closed for replies.

sjrcpa

Level 15

I would expect the :PA taxable amount to be included on the PA wages box on the W-2.

Yes you will have different basis to track,

The more I know the more I don’t know.

P

PsychoCPAAuthor

Level 2

Just FYI, these are ISOs, they are not included in wages. They are options that were simply exercised and not sold. Thus, to my knowledge, are only reported for AMT purposes (diff between exercised price per share and FMV per share).

sjrcpa

Level 15

If its taxable by PA when exercised, and there will be PA withholding, on what form do you think it will be reported?

The more I know the more I don’t know.

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