Post NUA Loss
Hello all,
I am looking for some verification on the following scenario please (assume NUA was appropriate here):
1) Stock has a $30 cost basis in the Employer Plan.
2) NUA is performed when the stock is trading at $70.
3) The stock is trading at $67 a few months later and the client needs to sell some of the position.
If sold at $67 (a few months after NUA) am I correct in assuming it is a ST Gain on $37 per share? Or is there a curveball with the $70? Is there any documentation on this scenario?
Many thanks all!
Permalink Submitted by Alan Spross on Wed, 2008-06-04 20:47
The gain is LT for any of the NUA up to a sale price of $70. For any addiitional gains after distributions (ie value exceeds $70), the holding period in the taxable account determines whether that portion is ST or LT. After one year in the taxable account, all gain is LT.
This is summarized in Notice 98-24, link follows:
http://www.irs.gov/pub/irs-drop/not98-24.pdf