Tax Law (Questions About Taxes)/Stock tender proceeds


QUESTION: I owned stock in a company I formerly worked for that was bought and I was ask to tender my stock at $40 per share.  I did and received a check for the proceeds of the tender for $1,200.  Tax was taken out of these proceeds for a net amount of $864.  Do I have to also pay capital gains on the gross proceeds of $1,200?


Thanks for your question.

No, you pay tax on the excess of the $1,200 over your cost basis in the shares.  If your basis is zero, you would pay tax on the entire amount.

Hope this helps.

John Stancil, CPA

---------- FOLLOW-UP ----------


Are the proceeds of $1,200 considered "income" and the tax that was taken out considered "income tax" the same way your salary is taxed?

Do I also have to pay capital gains tax on the excess over the cost basis?


The proceeds is income, but there is no separate capital gains tax. Sales of investments held more than 12 months are taxed at the preferred capital gain rate.  You will pay tax, on the gain only. That tax will be at the capital gain rate if you owned it more than 12 months.

Hope this helps.

John Stancil, CPA

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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