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#1
04-29-2008, 03:17 PM
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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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#2
04-29-2008, 04:59 PM
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IMPORTANT ADDENDUM: Forgot to mention that the total cost of the shares at the time of conversion is equal. In my scenario, 1 share of "A" at time of conversion is $20, and 1 share of "B" is $2, so total investment is $20 in each case.
This conversion is not an open-market sale, so I am assuming there are no tax implications of the conversion itself, only tax implications upon a sale. Correct?
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<<<<<'04 DG 6MT Coupe>>>>>
| Stillen CAI | Z-Tube | AAM Angled Spacer | Fast Intentions Intimidator Exhaust | Fast Intentions HFCs | Ruff Racing R278 in Hyperblack |
| 350Z H-techs | 35% Tint | Clear Corners | High Power LEDs | LED Turn Signal Mirrors | '06 Coupe Projectors |
NGC
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#4
04-29-2008, 05:59 PM
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Quote:
It's not actually a stock sale gain... it's a direct conversion which doesn't occur as an open-market sale. Either way I think I'm going to have to consult a CPA prior to filing for '08
__________________
<<<<<'04 DG 6MT Coupe>>>>>
| Stillen CAI | Z-Tube | AAM Angled Spacer | Fast Intentions Intimidator Exhaust | Fast Intentions HFCs | Ruff Racing R278 in Hyperblack |
| 350Z H-techs | 35% Tint | Clear Corners | High Power LEDs | LED Turn Signal Mirrors | '06 Coupe Projectors |
NGC
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#5
04-29-2008, 08:29 PM
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Yep Bert, you are better off asking an accountant for this versus a financial advisor. I'll try to remember tomorrow and ask one of our CPA's.
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03.5 G35. It's silver, it has a black interior, it has 4 doors. It gets me around town.
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