Do I have to pay tax on replacement stock from my employer’s acquisition?
January 24, 2005
Subject: Question related to ISOs and acquisition
Date: Wed, 29 Dec 2004
I work for private company X that was acquired by public company Y. I had ISOs for 20,000 shares of X, which were not exercised. When Y acquired X, all ISOs for X were exercised and were given to me part in cash, part in Y stock.
I understand that I have to pay tax for the cash portion that I received, but do I have to pay tax on the stock part, too?
Date: Fri, 07 Jan 2005
It depends on the type of acquisition. If it was a purchase, and not a stock-for-stock reorganization, the stock is probably taxable. Your employee benefits department should be able to tell you the consequences of the transaction. Usually they issue a lot of paperwork for transactions like these.