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Posted by curious on April 12, 2007, 12:06 am
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I worked for a company that gave stock options. At one
point, I exercised 3667 options with a strike price of
$0.30. At that point, the price of the company stock was
$1.35, so the company said I also had to pay taxes on the
paper profit. So I paid $1100.10 to exercise the options,
and $1349.84 in taxes, for a total of $2449.94.
Well the company ended up going out of business, so I need
to claim a loss. The company CFO told us that we could
claim the full value of the stock (based on its price at the
time of exercise) as a loss. So in my case, I had 3667
shares and they were worth $1.35 at the time of exercise, so
that's $4950.45. I'm not sure about this though, because I
didn't pay that much. I only paid $2449.94.
So do I claim $4950.45 as the loss, or do I claim $2449.94
as the loss?
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Posted by bono9763@yahoo.com on April 12, 2007, 6:32 pm
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> I worked for a company that gave stock options. At one
> point, I exercised 3667 options with a strike price of
> $0.30. At that point, the price of the company stock was
> $1.35, so the company said I also had to pay taxes on the
> paper profit. So I paid $1100.10 to exercise the options,
> and $1349.84 in taxes, for a total of $2449.94.
>
> Well the company ended up going out of business, so I need
> to claim a loss. The company CFO told us that we could
> claim the full value of the stock (based on its price at the
> time of exercise) as a loss. So in my case, I had 3667
> shares and they were worth $1.35 at the time of exercise, so
> that's $4950.45. I'm not sure about this though, because I
> didn't pay that much. I only paid $2449.94.
>
> So do I claim $4950.45 as the loss, or do I claim $2449.94
> as the loss?
Claim the $4950.45, because if they did it right, they also
included an amount in box 1 of your W2 of the year you
exercised the options that was the difference between what
you paid and what the stock was worth.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Seth on April 12, 2007, 6:32 pm
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> I worked for a company that gave stock options. At one
> point, I exercised 3667 options with a strike price of
> $0.30. At that point, the price of the company stock was
> $1.35, so the company said I also had to pay taxes on the
> paper profit. So I paid $1100.10 to exercise the options,
> and $1349.84 in taxes, for a total of $2449.94.
The taxes were on $3850 (3667*$1.05) of income, right?
> Well the company ended up going out of business, so I need
> to claim a loss. The company CFO told us that we could
> claim the full value of the stock (based on its price at the
> time of exercise) as a loss. So in my case, I had 3667
> shares and they were worth $1.35 at the time of exercise, so
> that's $4950.45. I'm not sure about this though, because I
> didn't pay that much. I only paid $2449.94.
>
> So do I claim $4950.45 as the loss, or do I claim $2449.94
> as the loss?
You paid $1100.10 to exercise, plus $3850 of your salary,
for a total of $4950.10.
Seth
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Rich Carreiro on April 13, 2007, 3:11 am
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> I worked for a company that gave stock options. At one
> point, I exercised 3667 options with a strike price of
> $0.30. At that point, the price of the company stock was
> $1.35, so the company said I also had to pay taxes on the
> paper profit. So I paid $1100.10 to exercise the options,
> and $1349.84 in taxes, for a total of $2449.94.
In other words, you paid tax on a paper gain
of 3667*($1.35 - $0.30) = $3850.35. Since
you paid tax on that gain, it becomes part
of your tax basis in the stock. So your basis
in the stock the $1100.10 you paid for it plus
the $3850.35 paper gain you paid tax on, for
a total basis of $4950.45. The amount of
tax paid is irrelevant and doesn't enter the
calcualtion.
> Well the company ended up going out of business, so I need
> to claim a loss. The company CFO told us that we could
> claim the full value of the stock (based on its price at the
> time of exercise) as a loss. So in my case, I had 3667
> shares and they were worth $1.35 at the time of exercise, so
> that's $4950.45.
That's correct.
> So do I claim $4950.45 as the loss, or do I claim $2449.94
> as the loss?
You claim $4950.45, since that was your
basis in the stock.
--
Rich Carreiro rlcarr@animato.arlington.ma.us
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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