Confirming what the others have said:
1. You can claim your son as a dependent.
2. You do not report his capital loss on your tax return*. It is not optional.
Assuming he has no other income, he does NOT need to file a tax return to report this capital loss. He needs to keep track of his capital loss carry forward for future years. That is, he must reduce the carry forward by any amount that "woulda" been used up, if he had filed a tax return. With 0 other income, that amount is 0, so the whole $17,000 carries forward.
Th slight risk in him not filing a tax return, is that the IRS might consider the entire 1099-B amount taxable and send him a dunning letter. But, that is easily explained.
*You cannot report it on your return because:
1. Capital losses (and most capital gains) are not allowed under the form 8814 rules
2. Form 8814 is not applicable to dependents over age 23
