Exchange funds – NUA
Recently the following question was posed –
What effect, if any, does moving NUA company stock into an “exchange” fund have on NUA tax treatment? Said another way, does NUA tax treatment continue to apply (i.e long-term capital gains) once an investor moves company stock into an exchange fund
Thank you
Permalink Submitted by Alan - IRA critic on Mon, 2015-09-14 18:19
There is little or no transparency on many aspects of exchange funds. Since the bulk of exchange fund activity in the last 50 years has dealt with appreciated employer stock and required 5mm of transferable assets to exchange into one, it is very likely that the cost basis of NUA shares has been used to determine the basis of exchange fund shares. I do not know how this basis is being handled under the current cost basis reporting requirements for 1099B forms, but a taxpayer can always override the reported basis on their 8949. The IRS has been very quiet with respect to these funds over the last 50 years.