Tax responsibility on company stock when redomiciled to Ireland earlier this year (AON stock)
What is my tax liability on my Aon stock when AON redomiciled earlier this year from the UK to Ireland? When they redomiciled from US to UK in 2012, the IRS informed me that it was considered a selling of the current stock and a purchase of new stock, so taxable. I received a notification dated April 2, 2020 that they were gong to redomicile to Ireland. The notices indicates “all Class A ordinary Shares of Aon UK (“Aon UK Shares”) are proposed to be cancelled through reduction of capital. In consideration of the cancellation of the Aon UK Shares, under the Scheme, shareholders will receive, in exchange for each UK Share, on new Class Ordinary Share of Aon Ireland (“Aon Ireland Shares”).” They say the scheme is expected to be effective April 1, 2020. (company number 604607 in the notification)
I contacted Computershare to ask about the tax liability. Their response said “You are still required to report gain/loss details on your tax return.” I didn’t think “exchanged” stocks would be subject to IRS taxes.
I would appreciate any guidance you can provide on how the IRS classifies this transaction from a personal tax perspective. I would be happy to provide the letters I received, I did not see a way to include attachments in this format.
Terry Says
This is a very specific case — and the company will be the best one to give guidance. They should request a Private Letter memo from the IRS to give guidance on the valuations, and the tax treatment of this exchange.
Yes, you’re a U.S. citizen, so any potential “gain” should be reported on your US income tax return. Here is a great website I’ve used to answer questions on those issues over the years concerning taxes for expats.
But the REAL issue is how the IRS is going to treat this particular transaction. And assuming you are not the only expat from the US in this position, it is the responsibility of the company to get the IRS tax treatment defined. Go beyond HR department if necessary to the CFO or corporate treasurer.
