I am currently working at a startup and have the option to buy its stocks. The valuation of the stock when I joined was $X and is currently $X+Y. I will land up paying taxes on the $Y gain per share when I purchase the stocks at $X. Question: if the company closes before going IPO, can I claim any part of it (or the entirety) as a loss when filling taxes?
It be a capital loss but do consult tax guy.
Thanks. I will. Looks like If i don’t have capital gains to offset the capital loss, I can use a capital loss as an offset to ordinary income, only up to $3,000 per year and can carry forward to subsequent years. I don't expect to have that much capital gain. My loss would be much higher than the 3k annual limit.
Not on unexercised options and not without a liquidity event. Having the option is not the same as owning the stock and realizing cap g/l. (Edit I'm wrong. You can claim loss on unexercised options equal to the purchase price of the option. But check with a cpa and check your equity options pkg).
If company shuts down then one can claim losses
Shouldnt the tax be on the full x+y? You never exercised it until you decide to buy it.
I am exercising the options by paying x per share. So the tax would be on the gain which is y ?
You chose to work for a startup: hint they all suck
If you’re an employee then you likely received ISO options which are not treated as taxable income to you. So if you have not exercised the options yet (put in cash in exchange for actual stock) then you won’t have any losses to claim. But if you do exercise and lose the cash that you put in to purchase the stock, that would be treated as a capital loss when the company goes under.
Thanks
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It’s neither a caption gain or not a capital loss at that point from what I can tell