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DK3869
New Member

Is a stock swap for an acquisition a taxable event?

When one company acquires another and their stock is used to acquire the shares in the company that I have stock in, is that a taxable event? 

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robtm
Level 9
Intuit Approved! This answer has been verified for accuracy by an Intuit expert employee

Is a stock swap for an acquisition a taxable event?

When one company is acquired by another company the stock in the acquired company is not taxied until the new company stock is sold. The cost basis when the stock is sold is what you paid when you bought the original company stock (the acquired company).

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5 Replies
robtm
Level 9
Intuit Approved! This answer has been verified for accuracy by an Intuit expert employee

Is a stock swap for an acquisition a taxable event?

When one company is acquired by another company the stock in the acquired company is not taxied until the new company stock is sold. The cost basis when the stock is sold is what you paid when you bought the original company stock (the acquired company).

DK3869
New Member

Is a stock swap for an acquisition a taxable event?

Thank you so much for the quick response. That is what I was thinking and other folks I spoke with said the same thing. My concern was my custodian that is holding my shares said it was a taxable event. My hope is they didn’t understand the question. 

Is a stock swap for an acquisition a taxable event?

It may be a  fully, partially  or non taxable event depending on how the exchange was done.    Please go to the company's website for their directions on this situation.  

DK3869
New Member

Is a stock swap for an acquisition a taxable event?

Thank you Critter-3 for taking the time to respond.  The company provided information on this transaction, including information on possible tax implications.  However, the language seemed to be purposely vague, with a lot of legalise, and confusing - kind of like "your mileage will vary".  The documentation said to consult with your tax advisor.  I spoke with my financial planner and several folks that work with the company that is being acquired and everyone is just as confused as me with this transaction regarding possible tax implications. 

 

It's my opinion that the lawyers who wrote the documentation are providing professional courtesy to tax attorneys to generate future business for them.  My guess is if I hired a tax attorney, I still would not get a definitive answer for two reasons.  One, the tax laws are so confusing and two, no one wants to be on the hook for possibly providing an inaccurate answer. 

 

My thoughts / hope are that the executives at the company being acquired (who hold large, stock positions)  made sure the deal was structured in a way to minimize their tax liability and this would benefit the smaller shareholders, like me.       

Is a stock swap for an acquisition a taxable event?

Please post that web site or the companies  so someone on this forum can give a more exact answer or may know what is happening.  I can only give general advice without specifics being posted. 

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