When do I have to pay a capital gains tax?

Key Takeaways

• Accepting a tender offer triggers capital gains tax treatment—the tax owed depends on whether you held the stock long-term (favorable rates) or short-term (ordinary income rates) and whether you have a gain or loss
• You can use existing capital losses to offset any capital gains from a tender offer acceptance, helping reduce your tax liability
• Tender offers are optional—if you don't accept, there's no taxable event, giving you the choice to delay or avoid taxes if you have losses to harvest first
• Read the full tender offer document before submitting shares, as terms vary widely including pro-rata redemption limits (the company may only accept a percentage of tendered shares) and minimum/maximum acceptance prices
• Monitor your account after tender acceptance for confirmation—you'll see cash deposits or replacement of shares, which signals the transaction completed and triggers your reporting obligation to the IRS