Should I sell stock to recognize losses after exercise?
July 13, 2005
Date: Tue, 5 Jun 2005
From: Ed
Hi Michael,
If I want to hold the stock after exercising ISOs, should I sell some stock to recognize losses to offset the gain from the exercise? Is the $3,000 capital loss deduction allowed when computing the alternative minimum tax?
Regards,
Ed
Answer
Date: Wed, 06 Jul 2005
Hello Ed,
Yes. Remember the additional income reported relating to the exercise of an ISO is ordinary income and not capital gain eligible for offset by capital losses. Capital losses are deductible when computing the regular tax and the AMT up to the amount of capital gains plus $3,000.
Good luck!
Mike Gray