4 ms·
if the company tanks right after you exercise, can't you deduct the losses?
by chwahoo 11y ago
if the company tanks right after you exercise, can't you deduct the losses?
- stevewepay 11y agoThis happened to a lot of people in the Valley after the dot com bust. They exercised their options, triggering a tax liability, and then the shares tanked, leaving them with no money to pay off the liability. They could only deduct $3000/year. Lots of people were in a lot of trouble, but I remember hearing that finally the IRS made a change so that this wouldn't affect you anymore.
- jkarneges 11y agoYou should be able to deduct the loss, but I'm not sure how that plays with the tax owed, since the loss is a capital loss and you're paying tax on an object of specific value (not a capital gain). It might not simply cancel out.