I have been searching online but cannot find any cases that were similar to my situation. I am trying my luck here, hoping someone more experienced can give me some hints. Let's say8 years ago, I joined a startup company (A) and paid $100 to early exercise 1000 shares of ISOs (with 83b filed within 30 days);6 years ago, Company A was acquired by another startup company (B) and the 1000 shares of A stock were exchanged for 100 shares of B stock. An early exercise of the 100 shares of B stock was done without any cost from my side and 83b was filed within 30 days. 4 years ago, I left Company B and by the time 60 shares of B stock were vested. The 40 unvested shares were not repurchased by Company B.Last year, I sold the 25 vested shares of B stocks. What would be my cost basis for the 60 vested shares of B stock sold last year? Should it be $100 or $100x60/100=$60? For the 40 unvested shares of B stock, can I report the proportional cost before the merger ($40) somewhere as a loss? Any information will be highly appreciated! Thanks!

Question

Cost basis for partially vested stocks exchanged after merger

Forum|Forum|4 years ago
April 5, 2022
1 reply
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I have been searching online but cannot find any cases that were similar to my situation. I am trying my luck here, hoping someone more experienced can give me some hints.

Let's say

8 years ago, I joined a startup company (A) and paid $100 to early exercise 1000 shares of ISOs (with 83b filed within 30 days);
6 years ago, Company A was acquired by another startup company (B) and the 1000 shares of A stock were exchanged for 100 shares of B stock. An early exercise of the 100 shares of B stock was done without any cost from my side and 83b was filed within 30 days.
4 years ago, I left Company B and by the time 60 shares of B stock were vested. The 40 unvested shares were not repurchased by Company B.
Last year, I sold the 25 vested shares of B stocks.

What would be my cost basis for the 60 vested shares of B stock sold last year? Should it be $100 or $100x60/100=$60? For the 40 unvested shares of B stock, can I report the proportional cost before the merger ($40) somewhere as a loss?

Any information will be highly appreciated! Thanks!

M

MinhT1

The cost basis for the first 100 shares of B stock which you had by exchange of the A shares is $100 or $1 per share of B stock.

The other 100 shares of B stock which you exercised for $0 cost have a cost basis of $0. The 60 shares which vested have a cost basis of $0. You do not claim a loss for the 40 shares which did not vest as your cost basis is $0.

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L

luludeyangAuthor

Highly appreciate your prompt response! Thanks for your time and help! Sorry that I didn't make it clear. The 100 shares of B stock that were early exercised were exactly the 100 shares of B stock exchanged from the 1000 shares of A stock. The vested shares which were sold later were out of the 100 exchanged shares of B stock. Will this change the answer?