1 year holding requirement reset when exercised ISOs converted due to acqusition?

Apr 21, 2008 1 Replies

Dear all:



Here is a question about incentive stock option. I know that in order for the gain on ISOs be treated as long term capital gain, it must be exercised and hold for more than 1 year (and be granted more than 2 years). My question is: if the company was acquired and the exercised ISOs converted to the new company's stock, will the converted stock be required to be held for another year in order to be qualified for long term capital gain? i.e., will the original holding period of the exercised ISOs be nullified if converted to another stock due to acquisition?



Thanks a lot.


-Feng


In most cases if the IRS has determined this is a tax-free exchange of old stock for new, the dates carry over.

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