Question about company going private

[merlin3942]

Hi all, I'm in the strange position of trying to figure out exactly what happens when a company you own stock in goes private. An individual stock issue I inherited from my Dad over 20 years ago is being sold to a private company, and all outstanding shares will be worth a fixed price agreed on by the company's board (which happens to be about 40% higher than it was when the sale was announced). The deal is supposed to be closed today. What I'm not sure about is if I have to actively do anything to "surrender" or "cash in" my shares, or if the cash will just auto-magically show up in my brokerage account at some point? Also, if the deal is closed today, but the money doesn't actually show up in my account until after the 1st of the year, does that put the tax hit off until next year?

 

[REWahoo]

You don't need to do anything as your shares will be automatically sold at the agreed price.

As to the tax hit, since it will be a 2019 transaction I'm thinking it will impact your 2019 taxes. Others with better tax knowledge should chime in if that's not the case.

 

[GrayHare]

If you hold physical, paper stock certificates you will probably need to send them to the company if you want their cash value, but in that case I'd check with the company for the proper procedure.

 

[MRG]

The Megacorp I w*rked for was sold this year for a agreed upon cash and stock price. I didn't have to do anything and magically my IRA was credited for the ~1000 shares I'd held on to. Since it's an IRA holding I'm assuming my taxes don't matter. I'd also assume you're looking at a 2019 corporate action for tax purposes.

 

[MRG]

If you hold physical, paper stock certificates you will probably need to send them to the company if you want their cash value, but in that case I'd check with the company for the proper procedure.

Good point. The OP did say he inherited them 20+ years ago. It depends on how they're registered in the system of record. They can be certificate only, electronic, or both. In the first case the OP would need to surrender the paper certs.

 

[REWahoo]

Good point.

+1

 

[pb4uski]

If you hold physical, paper stock certificates you will probably need to send them to the company if you want their cash value, but in that case I'd check with the company for the proper procedure.

+3

If they are held by a brokerage then the brokerage will tender the shares to the company's stock transfer agent and the proceeds will appear in your account.

 

[triangle]

The answer to your question is probably posted on the company's website under investor relations. Even if the deal were approved today, I would not expect it to be executed until 2020. If it were executed today imagine all the headaches it would cause for year end tax planning, ACA subsidies, etc.

 

[merlin3942]

Thanks to all who have responded. The shares are in "electronic form" in my brokerage account, so I assume I just have to wait for transaction to show up there. When I checked on-line this afternoon, the stock symbol had "disappeared" from my list of investments (it ceased being traded on NYSE as of today). There's nothing on the company website for investors (I don't know if that would have been taken down when the buyout was announced earlier this year?), so I'll have to wait and see when the funds actually show up in my account. It's going to be a significant change in my tax bracket for whichever year it winds up applying to, so I've kind of been in "limbo" for the past 6 months or so trying to figure out what to do about it to try and lessen the tax hit a bit. I did wind up donating about 5 years worth of my normal church contribution in the form of shares of this stock a few months ago to help some, and I assume that if it hits next year instead of this, I can "carry forward" any excess deduction from this year.

 

[JoeWras]

Surely the investor relations web page has info on the expected tax year hit.

This happened to me about 10 years ago and they had extensive FAQs. It was a somewhat brutal surprise to get forced income from the event.

 

[merlin3942]

After poking around some more on the company's website, I finally found a link to another website called Computershare, which apparently is handling "shareholder services". I've sent them a message through their on-line portal, and am waiting for a response. Thanks again!