Can I use capital gains on other stock to offset my capital loss on incentive stock options?

August 24, 2001

Subject:   RE: Incentive Stock Option Question
Date:   Wed, 25 Jul 2001
From:   Ryan

Thanks for the response! Can I use capital gains on other stock that was never subject to AMT to offset capital loss based on AMT calculations?

I have stock that I obtained via exercise of options (that was subject to AMT and thus is now at a loss for AMT purposes), and I have stock that I purchased normally (early in the company history when we first went public) — this stock is at a capital gain for standard capital gain calculations.

It seems that by strategically selling these two types of shares I can get net capital gain to be around $0. However, this means that I have more than $3000 loss for the AMT-based sale. Does the $3000 capital loss limit apply to the total of all sales (regardless of which were AMT-based and which were “standard”), or do I need to limit my capital loss to $3000 for my AMT-based sales?

Thanks much. If you need to charge me before you answer this question, let me know what the charge is and I’ll let you know whether I’m willing to pay it before you answer.



Date:   17 Aug 2001

Hello Ryan,

Yes, you can use capital gains from sales of other stock to help use the AMT capital losses for ISO shares.

In my opinion, the $3,000 capital loss limitation applies for AMT. You are supposed to complete a separate AMT Schedule D for your income tax return.

Good luck!

Mike Gray

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

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