Ostroff, Fair and Company
*Ostroff, Fair and Company>>>Investing

Is stock held over a year, but exchanged in a merger, now subject to short term capital gains?


I have had the original stock for over 2 years, but now the company is being bought. I'm wondering if I should sell before the deal is completed to avoid paying short term capital gains if I need to sell the new stock (considering that I will need to sell within a year to help with downpayment on a house).

If the swap is 100% stock, then you simply transfer the cost basis into the new stock. If cash is involved, you would have to pay some Capital Gains tax; best to see a tax attorney for that.
The exchange of shares in a merger is not a taxable event, and when/if you sell the new shares, your holding period is calculated from the time you bought the original/exchanged shares. No need to sell short.
Don't sell it as after merger it can go up.
http://www.smart-investments.org/best-st...
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