This could apply to several situations, but for me, I own stock, ESPP stock, RSUs, and options in a public company that is being bought by a private investment company.

When this goes through, that stock and the options will be converted in to $X per share (for the options, $X per share minus the exercise price). Some of the shares have been held more than 2 years, but a lot of it has not. The options have not even been exercised.

I worry that most of this will be treated as short term capital gains.

  1. How will this be treated (based on stock held by different time periods)?

  2. What can I do before the LBO is finalized to mitigate the tax burden?

  3. Is there anything that can be done after the LBO is finalized?

My thoughts- I will donate some stock to charity (I think it needs to be long term capitol gains type) I don't think I can convert it to a different format in one transaction and avoid triggering tax implications... Maybe there is a way...

Anyway, please help me understand what I might be facing.

  • The FMV deduction for appreciated listed stock (if you itemize, limited to 30% or 20% AGI, without any capital gains tax) doesn't depend on holding period (short-term vs long-term) -- although it is mostly advantageous for larger unrealized gains which typically occur over longer periods. Other than that, unless you have unrealized losses you can 'harvest' to offset the gains, I don't see any way to avoid the tax. (BTW 'capitol' gains are if you acquire more, or larger, government buildings.) – dave_thompson_085 Apr 28 at 9:53

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