Discussion:Foreign exchange gain/loss on stock option exercise
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Discussion Forum Index --> Tax Questions --> Foreign exchange gain/loss on stock option exercise
| 9 May 2007 | |
| My client, who has been living and working in Korea and an employee of a UK company there, exercised his employer' stock options during this year in which the shares were granted a few years ago in GBP. If it results in foreign exchange loss (GBP/USD) for the grant price between the grant and exercise date, any possibilities of treating this as an ordinary loss under section 988 (provided that his tax home is in Korea under S911 claim) in offsetting the option gain? how about the foreign gain/loss upon the sale? | |
| 9 May 2007 | |
| 1) I assume the stock is a UK stock?
a) If yes, then it's his choice to exercise an out-of-the-money stock option. Seems kinda stupid though. His basis is the greater of (A) the value of the stock on the date of grant x the exchange rate on the date of grant OR (B) the value of the stock on the date of exercise x the exchange rate on the date of exercise. If this is a loss (B - A = loss), no loss reported in the year of exercise. He can always sell the stock and realize the loss. If this is a gain (B - A = gain), the difference is taxable wage income to him in the current year. b) If this is not a UK stock, then to be 100% accurate, the grant price and exercise price must be computed using the currency of the stock. Otherwise, you could possibly be comparing apples and oranges. | |
