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Date:   Mon, 29 Dec 2008
From:   Dale

Mike,

For years, I received some ISOs, NQOs and restricted stock from a publicly-traded company. Last year, our division was sold and I had 90 days to exercise my options. I exercised and sold on the same day within the 90 day period.

I paid some estimated tax on my NQOs and restricted stock, but nothing for the ISO shares. I know I owe additional taxes.

I have some capital losses in my other accounts. Can I offset any of the gains on the NQOs and restricted shares with the losses? I know I can’t for the ISOs.

Thanks

Best regards,
Dale

Answer

Date:   9 Jan 2009

Hello Dale,

Probably not. If you sold the shares immediately when you received them, all of your income will be taxed as ordinary wages. Capital losses can only be applied to capital gains, plus $3,000 to other income.

Good luck!

Mike Gray

For more information about non-qualified stock options, request our free report, Non-Qualified 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.