Can gains from a disqualifying disposition offset capital losses?

September 10, 2001

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!


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.

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