Where did your stocks go after the company's privatization? Don't miss out on this tax.

What do shareholders experience when a public company is acquired and privatized? In simple terms, there are three steps:

Step 1: Stocks disappear, cash arrives The company is delisted from the exchange, and the stocks you hold are fully acquired at the agreed price. It usually takes a few days to a few weeks to receive the money.

Step Two: Prepare to Pay Taxes It's easy to fall into a trap here—stocks that are subject to acquisition are regarded as “sold,” and you need to pay capital gains tax. The key is how long you have held the shares:

• Holding period of less than 1 year = Short-term capital gains tax (higher rate)
• Holding shares for over 1 year = Long-term capital gains tax (lower rate)

⚠️ However, if your stocks are in tax-advantaged accounts like an IRA, you do not have to pay this tax.

Step 3: Reinvestment After obtaining cash, you can choose to reallocate your investment portfolio to ensure that risk diversification does not become an issue. For example, if a certain type of asset drops by 20%, you can increase your investment to balance the ratio.

This process seems simple, but tax planning is important—don't wait until next year's tax filing to regret it.