Tax Reporting
Can I exercise non-qualified stock options for short term capital gains?

October 10, 2014

Subject:   Question about your article
Date:   02 Dec 2013
From:   Padhu

Hello Michael,

What happens if a nonqualified option is exercised and converted to stock; the stock is held for five days and then sold. Would the income from the sale of the stock be a short term capital gain, which can then be offset using short-term capital losses from other stock sales?

Would the ordinary income from the exercise of the nonqualified option still be reported on Form W-2 for the year of exercise?

Thanks, Padhu


Date:   06 Dec 2013

Hello Padhu,

I’m sorry, but holding the stock doesn’t convert the gain from exercising a nonqualified stock option to a short-term capital gain. Ordinary income will still be reported on Form W-2.

See the books mentioned at Employee Stock Option Secrets or the Special Report, Nonqualified Stock Options – Executive Tax and Financial Planning Strategies at

Also, consider attending our in person or online seminars about Tax Planning for Employee Stock Options on January 16 or 17, 2014, mentioned earlier in this newsletter.

Best wishes,

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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