Write-off capital losses

Both items should have been entered on Schedule D. You should find such a Schedule has been created as a part of your tax file, if you entered the data. Then, just verify that the amounts shown are correct and match your records. And Yes, your capital losses should offset capital gains, to the extent of the total loss. Bill

No. The gain from the options was wage income, which is why it wound up on your W-2. When you report it on Schedule D you include the amount treated as wages in your basis. A same-day exercise/sale usually results in a short-term capital loss equal to the fees. A great source for information on options is

Check to see if Schedule D looks like I said it would. If it doesn't, something's wrong.

-- Phil Marti Clarksburg, MD

Only to the extent of $3000 of capital losses.

In other words, if you have up to $3000 in net capital losses for the year, you can take the whole loss. If you have more, you can only take $3000 and must carry the rest to next year. For example, if you have a $20000 loss, you take $3000 of it this year and carry the $17000 over to next year.

Look at Line 13 of Form 1040 as well as the entries on Schedule D. And look for the "Capital Loss Carryover Worksheet" as well.

-- Rich Carreiro snipped-for-privacy@animato.arlington.ma.us

Phil is right. I just did one of these for a client and examined the company paperwork in detail. The sales price was $40,000, the exercise price was $23,859 and the difference (the bargain element) was $16,141. The $16,141 was in his W-2. Since the money was already taxed as wages, the full amount he paid for the stock was $40,000 with a selling expense of $58. $40,000 - $40,000 = 0 gain or loss, and the selling expense is a loss. If you do this again, keep in mind that you will most likely not have any gain or loss except for the selling expense if you exercise and sell the same day. If you buy the stock with your own money and hold it for sale later, there can be a change in value. Most employees need to use the proceeds of the sale to pay for the purchase. Linda Dorfmont E.A., CFP, CSA

Thank you for the help! I did not get 1099-B form. How (what form) can I deduct my transaction commissions?

likely >> not have any gain or loss except for the selling expense if >> you exercise and sell the same day. If you buy the stock >> with your own money and hold it for sale later, there can be >> a change in value. Most employees need to use the proceeds >> of the sale to pay for the purchase.

Schedule D (cost basis). That is why you will likely show a small capital loss for the same day exercise and sale.