Stock I own is getting bought out—tax and brokerage question

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Topic Author
scintillator
Posts: 174
Joined: Mon Apr 08, 2019 9:30 pm

Stock I own is getting bought out—tax and brokerage question

Post by scintillator »

I bought shares of MDP in February, and it looks like now the company is getting bought out. The stock price has basically flatlined around 58.30. I'd like to just sell it here and be done with it (I don't know if there's still any merger risk), but if I do sell it, I'm on the hook for a few thousand in short term cap gains, which obviously I don't want to realize. I read that the deal is expected to close by the end of the year, but so what happens then? Would I still owe short term cap gains? If I do nothing, does Vanguard automatically credit my settlement fund with whatever the proceeds are? I don't want to get screwed out of thousands by not redeeming or doing something else I'm supposed to do. Thanks for any insight on how this process works.
mhalley
Posts: 10432
Joined: Tue Nov 20, 2007 5:02 am

Re: Stock I own is getting bought out—tax and brokerage question

Post by mhalley »

I think it depends on the nature of the deal. Is it going to be just a stock swap, or will there be cash also? If just stock, no cap gains and you keep your holding period if you want to wait out the original year.
https://www.thestreet.com/personal-fina ... iod-744165
increment
Posts: 1736
Joined: Tue May 15, 2018 2:20 pm

Re: Stock I own is getting bought out—tax and brokerage question

Post by increment »

scintillator wrote: Tue Oct 19, 2021 9:13 am Would I still owe short term cap gains? If I do nothing, does Vanguard automatically credit my settlement fund with whatever the proceeds are?
Yes, and yes. (Reportedly this is an all-cash deal.)
Topic Author
scintillator
Posts: 174
Joined: Mon Apr 08, 2019 9:30 pm

Re: Stock I own is getting bought out—tax and brokerage question

Post by scintillator »

Thanks for the responses. I guess I'll just sell now then and get hit with the short-term cap gains, since I doubt this drags out another four months to get me into long-term territory.
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