If you did not pay Alternative Minimum Tax as a result of your exercise of Incentive Stock Options (ISOs), then reporting your loss on your company stock is pretty straight forward. You will report the disposition of your "worthless" stock similar to how you would report a sale reported on Form 1099-B. While working in your return:
- In the income section, Select Investments and Savings....
- On the page "Did you have investment income in 2024?" Answer Yes
- On the page "Let's Import your tax info" click on "Enter a different way"
- Select "Stocks, Bonds, Mutual Funds" on the OK let's start with one investment type
- When asked "Which bank or brokerage is on our 1099-B?" Give a description of the investment for the bank or brokerage, leave the other fields blank. Click Continue
- Answer No to the next three questions - Do not indicate that this was the sale of employee stock!
- Answer Yes to "Did you buy every investment listed...."
- Select "One by One"
- Continue past the "1099-B"
- On the page "Now, enter one sale..." for Sales section, select either "Short-term did not receive 1099-B form"
- Select "Stock (non-employee) for type of investment you sold
- Enter the information the acquisition - date of exercise, and exercise price
- For date sold or disposed, enter the date the company was sold
- Enter $0.00 for proceeds
- On the next page, indicate "none of these apply"
Your disposition will be reported on Form 8949, with box C checked, and the loss will flow to Schedule D.
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