Can I deduct trading losses against gains?
July 23, 2001
Subject: Losses Deducted from gains in Employee options
Date: Tue, 28 Nov 2000
Can I deduct trading losses against gains I have when I exercised my non qualified employee stock options? If I made $100,000 on my employee options can I deduct $70,000 in other trading losses?
Date: 4 Dec 2000
No. Most trading losses are capital losses, which are deductible up to the amount of capital gains plus $3,000. Any unused capital loss deductions may be carried forward indefinitely.
The income from exercising non-qualified options is not capital gain, but additional compensation income, so it doesn’t qualify for offset by capital losses.