Form 3921
Also: Form 3921, 3921, ISO exercise form
The IRS form employers file to report each ISO exercise. Shows the grant date, exercise date, strike price, and FMV at exercise, which are the inputs for AMT and basis tracking.
Form 3921 is issued by the employer to the employee for each ISO exercise during the calendar year. A copy is filed with the IRS. The form lists the grant date, exercise date, number of shares, strike price, and FMV at exercise. These figures feed Form 6251 to compute the AMT preference and set the AMT-adjusted basis of the exercised shares. Employees typically receive Form 3921 by January 31 of the year after exercise.
Example: an employee exercises 4,000 ISOs at a $6 strike when the FMV is $38 on April 14. The company issues Form 3921 showing 4,000 shares, $6 strike, $38 FMV, and an April 14 exercise date. The $128,000 bargain element becomes the AMT preference on Form 6251. The regular basis is $24,000; the AMT basis is $152,000.
Common mistake: discarding Form 3921 after filing that year’s return. The AMT basis adjustment survives until the shares are sold, potentially years later. Save every Form 3921 permanently in a records file tied to the lot.
Form 3921 matters at filing year of exercise, at filing year of sale, and at long-term AMT credit tracking.