Box 14 has ISO stock entered and it is included in Box 1 wages of W-2

Question

If the ISO stock is included in wages must the info on form 3921 have to be entered also?

itonewbie · Accepted Answer

No, ISO will never be subject to double tax.

If the disqualifying disposition occurred in the same year it was exercised, there is no adjustment for AMT on F.6251. You would calculate the gain/loss using the exercise price plus the bargain element already subject to tax in Box 1 as the cost basis.

If it happened in a year after the exercise, the bargain element should have already been subject to AMT in a previous year. You would then have different cost bases for regular tax and AMT. The basis for regular tax would be as I described above and the cost basis for AMT would be adjusted by the income that had been recognized in the previous year, which will result in a smaller gain or larger loss.

ISO is a deferral item for AMT purposes, meaning it creates only timing differences. That's also what could result in MTC.

George4Tacks · Answer

Instructions for EmployeeYou have received this form because your employer (or transferagent) transferred your employer’s stock to you pursuant to yourexercise of an incentive stock option (ISO). You must recognize(report) gain or loss on your tax return for the year in which yousell or otherwise dispose of the stock. Keep this form and use it tofigure the gain or loss. For more information, see Pub. 525,Taxable and Nontaxable Income.When you exercise an ISO, you may have to include inalternative minimum taxable income a portion of the fair marketvalue of the stock acquired through the exercise of the option. Formore information, see Form 6251, Alternative MinimumTax—Individuals, and its instructions.Employee’s taxpayer identification number (TIN). For yourprotection, this form may show only the last four digits of yoursocial security number (SSN), individual taxpayer identificationnumber (ITIN), or adoption taxpayer identification number (ATIN).However, the employer has reported your complete TIN to theIRS.Account number. May show an account or other unique numberyour employer or transfer agent assigned to distinguish youraccount.Box 1. Shows the date the option to purchase the stock wasgranted to you.Box 2. Shows the date you exercised the option to purchase thestock.Box 3. Shows the exercise price per share of stock.Box 4. Shows the fair market value (FMV) of a share of stock onthe date the option was exercised.Box 5. Shows the number of shares of stock transferred to youpursuant to the exercise of the option.Box 6. Shows the name, address, and TIN of the corporationwhose stock is being transferred (if other than the corporationshown in TRANSFEROR boxes in the upper left corner of theform).Future developments. For the latest information aboutdevelopments related to Form 3921 and its instructions, such aslegislation enacted after they were published, go towww.irs.gov/Form3921.

Sign up

Login with SSO

Let's get you signed in

Login with SSO