My company is being bought out – share payout offer?
I was given stock shares in my medical device company over the last few years And it was just bought out by a bigger medical company. They are offering me a $46,000 payout. If I take the payout will I loose a lot in taxes (because I’d love a new car) or do you think I should try to roll it into new shares or a mutual fund or something (because I’m really not that hard up at this time in my life). Thanks,
Terry Says
Is that option being offered to you?? Better check on the details of their offer.
Yes, if you take the payout, you will owe ordinary income taxes — assuming it was a payroll deduction and not part of a qualified retirement plan.
But you should also ask if there is a “capital gain” on this buyout — instead of ordinary income taxes. They should be able to give you an answer based on how this deal is structured.
If the stock was indeed in a “qualified plan” (tax deferred) they should also let you know your options to roll it into an IRA. It is very unlikely that they will convert these shares into shares of the acquiring company.
I’m just guessing — and you should verify by asking the above questions — that you will have very little choice about what to do with this payout, and that it will be considered ordinary income and added to your other income for the year. Then you can spend or save or invest or buy a car with what’s leftover.
Do your homework now by demanding answers to the above.