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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4674
Experience:  35 years tax experience, including four years at a Big 4 firm.
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I received a 1099- stock in my Employe stock purchase plan

Customer Question

I received a 1099-B for the stock in my Employe stock purchase plan because of a merger. I did not sell the stock. The 1099-B shows a Gain based on what I purchased the stock for and what the proceeds are from the merger. Do I need to pay taxes on these gains? I wasn't intending on selling the stocks
Submitted: 1 year ago.
Category: Tax
Expert:  PDtax replied 1 year ago.

hi from Just Answer. I'm PDtax. I'll assist.

Most mergers require purchase of 100% of the outstanding shares of the acquired company. While 100% of shareholders don't typically approve, 100% of shareholders typically get bought out.

Terms of buyouts differ in deals. Some are 100% stock of acquirer for stock of acquired, with cash paid for fractional shares.

Others, like yours, might require liquidation of ESPP plan balances for cash, as the acquirer might not have an ESPP plan, and had to liquidate your company's plan.

You do need to pay taxes on the gains, but only until you have unfettered use of the cash used to buy the shares. If the transaction closed in 2015, but cash was not available until 2016, you could argue a year's deferral.

Thanks for asking at Just Answer. Please rate my assistance using the star rating scale to close out your question. I'm PDtax.