Taxation when (US) stock is acquired

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Rysto
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Taxation when (US) stock is acquired

Post by Rysto »

I tried googling on the subject but could only find things talking about taxation from the corporation's perspective, not a stockholder's. I am a resident of Canada and I have unvested restricted stock units (RSU) in my employer. The company has accepted a buyout and the transaction is expected to close next year. The buyout is for both cash and equity, but the equity will be a brand-new share class that won't trade before it's issued in the buyout. When the buyout closes all of my RSUs will immediately vest.

I am rather confused as to how all this will be taxed. I know that the RSUs, once vested, are taxed as employment income. I'm taxed on the fair market value of the shares at the time that the shares vest. I don't really understand what the fair market value is in this case given that my employer's stock will be withdrawn from trading at the time when the shares vest. Do I use the fair market value of the cash and equity that I receive in the deal? Then what's the FMV of a stock that hasn't traded yet? Does this all get reported on a T4 and I don't have to worry about it?

Secondly, it's possible that the deal closes after some of my RSUs vest. If that happens, I gather it's a deemed disposition of my stock and I have to report a capital gain/loss? Is it a deemed disposition for the portion of my stock that is exchanged for the equity, or just the cash portion?

What cost basis does the new equity have?


If anybody can help answer these questions or point me at a website that talks about how stock acquisitions are taxed in Canada, that would be very helpful. Thanks.
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