Private company A was bough by a public company B. All unvested A's common stock (result of early exercise) will be rolled into B's restricted stock (with the same vest schedule).
Is this taxable event at the time when deal closes? If yes, then is this taxable as Cap gain or Ordinary Income?
Now lets assume that at the vest date the company's B stock price increases (or decreases). How this is going to be taxed?
I am asking for public opinion, because I received contradictory information from two different tax advisors:
- One told me that I should not care about taxes until I receive cash (conversion is not taxable event),
- Other says that spread from acquisition is taxable as Cap gain (conversion is taxable event).
The closest law, that seemed to explain this situation was (26 USC § 1033). But again, I could be missing something... I am leaning towards the second tax advisor opinion.