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ISO exercised: loss harvesting or carrying over

In 2021, my exercised ISOs those were granted in 2017. The FMV was $0 and exercise price was $0.5. Say 100 stocks were exercised. While filing 2021 taxes, AMT was 0.

 

In 2023, the startup ceased/closed its business. Other than a a letter saying business ceased, we did not receive any tax related documents.

 

Can we harvest this $50 loss? How do I calculate the loss (I assume AMT credit)? How do I file this in turbotax?

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1 Best answer

Accepted Solutions
ThomasM125
Expert Alumni

ISO exercised: loss harvesting or carrying over

You can enter an investment sale in TurboTax and list the cost of the investment equal to what you paid for it and a sale price of $0 to enter a capital loss on your tax return. You enter the sale in the Investment Income section of TurboTax and then Stocks, Cryptocurrency, Bonds, mutual funds, Other. You don't need to indicate that the sale involved company stock to simplify your entry:

 

 

If it was an incentive stock option (ISO) you would only potentially incur an alternative minimum tax (AMT) in the year you acquired the shares, but only if you were subject to an AMT in that year. I believe you state that that wasn't applicable to you, that you didn't pay any AMT tax in the year you acquired the stock, so you can't report an AMT credit in the year the stock became worthless. 

 

 

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1 Reply
ThomasM125
Expert Alumni

ISO exercised: loss harvesting or carrying over

You can enter an investment sale in TurboTax and list the cost of the investment equal to what you paid for it and a sale price of $0 to enter a capital loss on your tax return. You enter the sale in the Investment Income section of TurboTax and then Stocks, Cryptocurrency, Bonds, mutual funds, Other. You don't need to indicate that the sale involved company stock to simplify your entry:

 

 

If it was an incentive stock option (ISO) you would only potentially incur an alternative minimum tax (AMT) in the year you acquired the shares, but only if you were subject to an AMT in that year. I believe you state that that wasn't applicable to you, that you didn't pay any AMT tax in the year you acquired the stock, so you can't report an AMT credit in the year the stock became worthless. 

 

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
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