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One is to INTERCUT the conversation. First you describe the location of each side of the conversation and then specify INTERCUT and have the dialogue as normal. Example:
INT. JIM'S PHONE-BUILDING - DAY
He dials the phone.
EXT. JACK'S PHONE BOOTH - DAY
The phone rings. Jack answers it.
INTERCUT the following.
JACK Hello?
JIM Testing, test.
Another way is to use (V.O), you shouldn't use (O.S) because that suggests that they are in the same location.
INT. JIM'S PHONE-BUILDING - DAY
He dials the phone.
EXT. JACK'S PHONE BOOTH - DAY
The phone rings. Jack answers it.
JACK Hello?
JIM (V.O) Testing, test.
You don't really want to have a slugline after every line of dialogue spoken so I'd suggest one of these methods
Another way to do it and cut between locations without excessive sluglines is like this:
INT. JIM'S PHONE-BUILDING - DAY
He dials the phone.
EXT. JACK'S PHONE BOOTH - DAY
The phone rings. Jack answers it.
JACK Hello?
INTERCUT BUILDING / PHONE BOOTH
JIM Testing, test.
JACK Is it this or the following?
JIM I thought it was the previous.
JACK Have we done this before?
JIM I'm so confused.
END INTERCUT
Jack hangs up and shakes his head.
---
Whichever side you begin the intercut is where you end it. If you are afraid there is confusion, you can put another slugline after the END INTERCUT just to be clear, and if you don't end where you began (in this case, at the Phone Booth), then you need to do another slugline.
The V.O. is the proper way to do a phone conversation where the audience hears half the conversation through the phone.
Thanks, that really helped. But now I came across a similar, although different problem.
I'm creating a stalking scene, where one person is in her apartment watching TV while the killer is creeping up slowly towards the apartment. I'm intercutting the scene, but because it doesn't have dialogue, how do I do the intercut? In the previous examples, the intercutting was identified by the names of the characters as they spoke. How do you do that here?
Furthermore, the insert of the TV complicates things further. I've written it basically:
INT. APARTMENT - NIGHT
The victim watches TV.
INT. APARTMENT BUILDING - SAME TIME
KILLER POV. The killer keeps creeping.
INTERCUT APARTMENT/APARTMENT BUILDING
The victim watches TV.
INSERT TV SCREEN
It's a funny TV show going on there.
BACK TO SCENE
KILLER POV. The killer keeps on creeping along.
The victim is still watching TV.
I'm worried about the last part though. The fact that there's no barrier between th killer's actions and the victim's actions might make it confusing to read. Is this how it should be done?
I use INTERCUT everytime I have to switch repeatedly from one location to another, regardless of if I have characters speaking in such locations or not. I think that in your example, you could still use INTERCUT.
Once you establish that the characters are in different locations using different sluglines, in the INTERCUT it will be clear that they´re still in different places each time you mention them. Hitting the "enter" key after switching from one to another, is highly recommended.
And if you think the INSERT complicates the matter, just take it away. You can just describe what´s going on in the TV. How about this?
INT. APARTMENT - NIGHT
The victim watches TV.
INT. APARTMENT BUILDING - SAME TIME
The killer keeps creeping.
INTERCUT APARTMENT/APARTMENT BUILDING
The victim watches TV. It's a funny TV show going on there.
(Here's a scene where I used 'Intercut' - Hope it helps) ---->
INT. MIKEY'S HOUSE -- EVENING
Mikey arrives home and the PHONE IS RINGING. The caller I.D shows Data's name FLASHING. He sighs and picks up the phone.
MIKEY What now, dude?
DATA (O.S.) You did pick up the suits, right?
MIKEY Yeah. Everything's under control.
DATA (O.S.) Come on Mike! I've asked you a hundred times and...
MIKEY Alright! I haven't got 'em yet. I promise by tomorrow you'll...
INTERCUT TO:
INT. DATA'S STUDY -- EVENING
Data is fixing Chunk's modified vacuum cleaner. Chunk is sitting next to him, wearing a plaster on his forehead. He does not look impressed. Emma gives them two glasses of water. Chunk flicks drawing pins at the machine.
DATA WHAT? Tomorrow?
MIKEY(O.S.) TODAY! (pause) Jeez, Data! I just walked through the...
Data shakes his head and hangs up the phone. He flashes Chunk an evil glare and points to all the mess he made with the drawing pins.
I believe this is a case where too much script directing is going on. I can understand the purpose of the INTERCUT, but why is what is on TV so important? What has been suggested is technically correct, but unless the TV provides a vital piece of information, then I would leave it to the director. Probably no reason to INSERT it.
George is absolutely right. Don't concern yourself with being the director unless you are really directing the script Write it for the reader. Be kind to them. Make it interesting.
Yeah, write in a way that seems cool and less stressful to you. But at the same time, it totally works. That's how I do it. By the way, I just learned about "intercut" from you dudes. Usually, I just say "We CUT BACK AND FORTH DURING THE CONVERSATION."
Im working on something at the moment and have a part where the phone is pretty much a big part of the story. I dont know if my way is any better or if it is right, but i have put it across in a way I hope it is easy to follow.
INTERCUT WESTLAKE BEDROOM/ MANDELL HOUSE LIVINGROOM MAN IN BLACK (husky) Hello Kristy. KRISTY Hi...umm...is Katie there? MAN IN BLACK No. Kristy seems taken aback by the response and hesitates for a moment. The Man In Black is calm and relaxed on the sofa, his arm still around George’s neck. KRISTY Can I speak to Katie please? MAN IN BLACK No. KRISTY OK..is this Steven? The Man In Black remains silent for a moment. KRISTY (sarcastic) Cos Steven, I’m Kristy, I’m like the person who is inviting you both round tonight? There is another silence. Kristy is looking confused in her room. The Man In Black is calm and relaxed. Finally, he replies. MAN IN BLACK Yes. KRISTY (confused) Yes what? MAN IN BLACK (lying) Yes, this is Steven. KRISTY (uneasily) OK great...well...umm...nice to like actually get to speak to you. I was calling Katie ‘cos you are like late? MAN IN BLACK (calmly) Late for what, Kristy? KRISTY (agitated) Jesus, didn’t Katie tell you? She said it was cool...
I know the dialouge and the whole scene is not corrected yet, but this is an example of what Im working with, but would this seem to be ok?
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Usually, I just say "We CUT BACK AND FORTH DURING THE CONVERSATION." 
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