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I still have ESPP shares in a company I used to work for. This company is getting bought out (deal has been publicly announced and should close soon). Many of these shares have greatly increased in value since I bought them. The most recent purchase was in 2010 so they're all long-term. I believe the deal is for all cash, no shares of the purchasing company.

When the deal closes, will it be as if I sold all of my ESPP shares with regards to taxes? Is there any way to mitigate this?

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    – C. Ross
    Commented Apr 28, 2014 at 16:06
  • Thanks! I went ahead and checked out the 'About' section.
    – Chris
    Commented Apr 28, 2014 at 16:43
  • Did you receive any information or find any deal documents that include a short discussion of shareholder tax consequences?
    – NL7
    Commented Apr 28, 2014 at 17:40
  • I don't recall receiving anything, but I was able to hunt down some material. It says that "A U.S. holder’s receipt of the merger consideration in exchange for shares of our common stock will generally be a taxable transaction for U.S. federal income tax purposes." Looks like it's what I expected.
    – Chris
    Commented Apr 29, 2014 at 4:09

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When the deal closes, will it be as if I sold all of my ESPP shares with regards to taxes?

Probably. If the deal is for cash and not stock exchange, then once the deal is approved and closed all the existing shareholders will sell their shares to the buyer for cash.

Is there any way to mitigate this?

Unlikely.

You need to understand that ESPP is just a specific way to purchase shares, it doesn't give you any special rights or protections that other shareholders don't have.

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  • Thanks. I figured as much, but I wanted to confirm.
    – Chris
    Commented Apr 29, 2014 at 4:10

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