NUA Question- stock sold within a week
Client successfully completed an NUA with another custodian. The stock that was transferred Northrup Stock. It went into a brokerage account. Unfortunately, the custodian turned around and convinced client to sell Northrup stock to diversify . I told client that this triggered another taxable event. He insists it did not.
If $220,000 of stock was put into a brokerage account and he sold within a week to diversify then is the move a long term capital gain tax?
If so, what is the basis? It is the date it was moved into the brokerage account?
Thanks
Permalink Submitted by Alan - IRA critic on Fri, 2025-01-24 17:52
Yes, the sale of NUA shares produces a LTCG for the NUA per share. If the stock appreciates after distribution and before the sale, the added appreciation is taxed at the higher ST rate if the sale is done in the first year after distribution.
Example: Cost basis per share $25, NUA per share $75, value at distribution therefore $100. Stock is sold a month later for $103.
The cost basis is taxed in the year of distribution at the ordinary income rate whether the share is sold or not.
For the sold share there is a LT CG of $75 per share (the NUA), and a STCG of $3 per share.
Permalink Submitted by Maurice Baker on Tue, 2025-01-28 21:21
Thanks for the information. You really helped me.