My client lives in Chile. He is an officer of a publically traded Canadian company that is merging with another publically traded Canadian company. He was awarded options as part of his employment, and due to the merger he must now exercise the options and tender his shares for new shares of the aquiring company. This is a large 6 figure gain and it is considered a deemed disposition when the merger close as he is not a Can resident. The tansaction will very likely close this month before 2009 year end.
He has been filing US tax returns for years, and preparing them himself, and this will be an extrodinary gain and a very large cheque he would have to write to the IRS. I think the tracking of this transaction would be very difficult for any of the 3 governments to understand and he is afriad the IRS will make him pay a full rate on the gain as if he was making a short term trade ... though he has had the options for over a year.
So what is his tax cost? How can we minimize it?
Thanks!
US Citizen ex-pat living in Chile large stock gain in Canada
Moderator: Mark T Serbinski CA CPA