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Any financial advisors? Question about capital gains.
OK so I recently executed a stock conversion (a company's "A" stock to their "B" stock) and I have a question about how capital gains will be calculated upon selling.
Hypothetical scenario for illustrative purposes:
1 of the "A" shares is equal to 10 of the "B" shares. Purchase price of "A" was $1. Say the "B" shares are now valued at $2 each. If I sell one share of "B", would I pay capital gains on $1 total for the first share ($2 value minus $1 initial cost of total investment) or would I pay capital gains on $1.90 for each share I sell ($2 value minus 1/10 of the initial cost of the total investment)?
It makes more sense to me that the first $1 of total sale would not be taxed and then the hypothetical $19 of investment remaining would be taxed at the full capital gains rate. However, if I sell these in different tax years, this could be problematic.
In other words, help! I'm confused and have no expertise in this area.
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