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akirby9
New Member

potential stock sale and impact on taxes

I own stock in a company that will likely go through a merger next month. I have been offered the option to transfer the stock to the new company and/or do the cash option. I would like to do a partial cash option so that I can use that cash as part of my down payment on my first house, which I hope to buy this year. How can I determine what is the optimal amount to take as the cash option so that I pay the least amount of taxes, not only as capital gains but also on my overall income? Is this something I should use a live CPA for to get advice on my specific situation? Thank you.

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2 Replies

potential stock sale and impact on taxes

You should consider consulting a qualified local CPA or other tax expert here if the numbers are at all material to you because that local person can be privy to information about the entire transaction that you haven't disclosed here.

 

In particular, your ability to accept all cash, some cash and some stock, or all stock suggests to me that no matter what particular choice you make the entire transaction will be considered a sale of all of your old stock.  So you may be facing a more or less "fixed" amount of capital gains irrespective of how you receive your "proceeds."

potential stock sale and impact on taxes

akirby9,

 

TomYoung is quite right, as always.  However, if you first want to delve a bit on your own, pull up the actual merger agreement from SEC.gov (look for 14A documents and, in particular DEFM14A) which is included as part of the proxy notice and scroll down to the section on MATERIAL U.S. FEDERAL INCOME TAX consequences.  This will inform you as to the taxability of cash and stock you would receive in the merger.

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