Use 30,000 bought 300,000 stock options at $0.1 per share after company went to IPO.
The market price is $2.1 per shares. So, you made $600,000 capital gain.
Now, you did not want to sell this one in that year since you like to wait for a while.
However, since you bought the stock with $600,000 paper gain, you need to come out of money to pay the AMT tax on the gain.
latter on the market crashes and you cannot sell .... you lost more than the 30,000 and also you need (or already paid) the tax.
The loss you can deduct each year $3000 in your tax for the capital gain each year.
So, it is quite possible to lose lots of money.
The market price is $2.1 per shares. So, you made $600,000 capital gain.
Now, you did not want to sell this one in that year since you like to wait for a while.
However, since you bought the stock with $600,000 paper gain, you need to come out of money to pay the AMT tax on the gain.
latter on the market crashes and you cannot sell .... you lost more than the 30,000 and also you need (or already paid) the tax.
The loss you can deduct each year $3000 in your tax for the capital gain each year.
So, it is quite possible to lose lots of money.
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