grtsdad2
New Member

My company is going private and I will be paid out my stock, how do I know what the tax will be on the amount of $18,886 I will be receiving?

 

Investors & landlords

How did you acquire the stock in the first place?

Investors & landlords

and when?

Investors & landlords

Nobody can really answer that question; there's not enough information in your post.

The amount you'll be RECEIVING isn't the relevant number to look at.  What is taxable is the GAIN or LOSS realized on the stock sale, and that depends on your basis, which nobody here knows.  Also, your holding period for the stock will affect the tax calculation.  Generally gains from short term holdings, (owned one year or less), are taxed at "ordinary" income tax rates, while gains from long term holdings, (owned over a year), are taxed at favorable "long term capital gain rates" which range from 0% to 20%.
Anonymous
Not applicable

Investors & landlords

it may also depend on how the company treats the payment.  part could be considered compensation.   you really need to talk to the people at the company who can give you answers. 

Investors & landlords

You pay tax on the capital gain, the difference between your cost basis and the selling price (or in this case, the buyout price).

Suppose you bought the shares on the open market and paid market price of $10 a share, and they are being liquidated for $18 a share.  Your cost basis is $10 and your gain is $8 per share.

Suppose you were award a qualified stock option at $5 and you exercised the option.  You likely paid income tax on the option price when you were awarded the option.  That makes the basis of the option $5 per share, so you have a gain of $13 per share.

If this was from a stock option or ESOP, the company sent you important forms that you should have kept (form 3921 or 3922).  You report the payment as a capital gain as if you sold the share for the liquidation price (which is exactly what you did) using information from the form 3921 or 3922 to calculate how much of the payment is a capital gain.


If the stock is held in a qualified retirement plan (a pension, 401k, etc.) then the money is not taxable as long as you leave it in the plan.  They are just converting one asset (stock) into another asset (cash) as long as it stays in the plan, and you can invest it in anything you want.  If they are also closing the plan, then you can either take the cash and pay ordinary income tax on the entire amount, or you can roll it over into a new qualified plan or personal IRA and postpone the tax until you retire.