I was granted options at the privately held company that I work for. In 2011 the company was purchased by a different group of private investors. When this happened they cashed us out of all of our options. It came to us in just a regular check that had tax, FICA, and all other normal deductions taken out of.

When I did my 2011 taxes I just treated this as income. Should I have treated this as Schedule D income? I started thinking about this again as I have a number of years of latent rental property losses, and I'm wondering if these losses would have offset the options income, as they are both passive?

Thanks, Gus