Can I offset a stock option gain with capital losses?

May 23, 2005

Date:   Mon, 02 May 2005
From:   Dave

I have some non-qualified stock options. When I exercise them, I understand that the gain is taxable as ordinary income. I have some long-term capital losses I’m trying to use. Is there any way to offset the stock option gain with my capital loss carryover?


Hello Dave,

Capital losses can only be applied to capital gains plus $3,000. Since the income from the exercise of non-qualified stock options is taxed as additional wages and assuming you have no other capital gains, the $3,000 limit applies and any excess loss is carried over.

Good luck!

Mike Gray

For more information about non-qualified stock options, request our free report, “Executive Tax and Financial Planning For Non-Qualified Stock Options”.

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