Here is my scenario: Assume I am selling a company I started about six
months ago. The company, a C corporation, has just authorized and
issued shares to myself and others. The shares vest over three years
but will vest immediately in the case the company is acquired. Assume
the sale happens in a matter of months- the acquiring company could
pay cash or pay with their own shares (at a conversion ratio to ours).
What kind of tax liability will I face? Income tax or capital gains?
Regarding capital gains, I realize long-term capital gains kicks in
after one year. How does this apply for shares which have been
allocated but have yet to vest? Most importantly, what can I do today
to minimize my tax obligation in the case of an acquisition. (I am
open to creative ideas, not just minor considerations, and my
objective is to ensure that when taxed, I will be taxed at the
long-term capital gains rate. I am flexible in terms of who or what
holds title to the shares.) Thanks and feel free to ask questions to
clarify this scenario.
[I would appreciate researched answers as opposed to references to
documents or web-pages] |