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Date:   Sat, 25 Aug 2001
From:   Michael

The private company that I work for just got acquired for cash. All of my ISO's vest fully as a result, and the ISO transaction is considered a disqualifying disposition. Could the gains from this disposition offset my losses from the stock market?

Thanks for your help!

Answer

Date:   Fri, 7 Sep 2001

Hello Michael,

The income from a disqualifying disposition of ISO stock generally may not be offset by capital losses from the sale of other stock. (In your case, it sounds like we’re dealing with a "same day sale" scenario.)

Good luck!

Mike Gray

For more information about incentive stock options, request our free report, Incentive Stock Options - Executive Tax and Financial Planning Strategies.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this answer was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.