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I'm a common shareholder in a US private company acquired in Nov 2017 by a US public company. I'm planning to wait until Jan 2018 to exchange my shares for cash+stock in the acquirer. (The M&A proceeds-- cash and stock-- are currently being held at an escrow company who's waiting for me to give them to go-ahead to do the exchange.)

If I don't do the exchange util January 2018, then are my capital gains taxable in 2017 or 2018? In other words, is the sale date considered to be the date that the M&A transaction closed, or the date that I actually exchanged my private-company shares for the M&A proceeds (cash + acquirer stock) ?

If it matters, the escrow company has told me that the Sale Date on the 1099-B they send me will be the date of the exchange (Jan 2018), not the close date of the acquisition (Nov 2017).

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Is the 1099 going to be generated by the escrow company, and if so are they going to show the transaction date of the conversion? If both of the answers to these questions are yes, then you can choose the date that you are taxed on the gains, and place all of the income into 2018. Contact the escrow company and find that out, then attempt to do a realistic estimate of your 2018 taxes to determine what time frame you should place the income within. With current debates over tax legislation taking place in the US, it further complicates answers to the question.

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  • Yes and yes. Agreed that upcoming likely changes in tax law makes this more complicated!
    – bugalicious
    Dec 12, 2017 at 1:20
  • @bugalicious Luckily, many of the details of the proposed tax legislation have been released, so you can probably produce a fairly accurate estimate of what your tax basis would be for a given gross income in 2018.
    – Derek_6424246
    Dec 12, 2017 at 1:47

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