I'm thinking of exercising some of my stock options (type: ISO).OK. ISO's. There's some different rules for ISOs. Reading ahead, I suspect you are not aware of them.The option price is about $5 and the current market value is $15.OK. Typical position for an ISO.Say, I want to exercise 1000 shares and hold the stock for awhile.So, there will be taxable $10,000 cap gain.Wrong. If you exercise and hold the stock, there is no current taxation for regular taxation. For AMT purposes, the $10,000 is ordinary income, and the basis in the stock you hold is the $5k option price plus the $10k of ordinary income you need to recoginze.If you do NOT hold the stock for the required period (help - is that one year or two? Or something else?), the $10k will become ordinary income for regular taxes as well. And your basis will be adjusted to $15k. Then your gain or loss is calculated from there.However, if you play the game and hold the stock for the required period, the $10k of current discount is converted to captial gain, and is recgonized only when you sell the stock.If I have lost $5,000 in stock xxxx, can the loss offset the gain from the option so that the total cap gain becomes $5,000 ?As mentioned above, you've got to hold the stock long enough to make the gain a capital gain. If you do that, then yes, the gain can offset other capital losses.There's some info here in our FAQ about stock options. The link is at the top right of the page. You might also check out www.fairmark.com , where there is an extensive and very good discussion of stock options.--Peter
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