TXNM

What tax implications might arise for shareholders receiving cash for their TXNM shares?

Created August 06, 2025 at 07:33 PM

Quick Take‑away

Cash‑out = a taxable sale of stock – the moment you receive the $61.25 per share you have realized a capital‑gain (or loss) that must be reported on your tax return.
The amount you owe depends on three key variables:

Your cost basis & holding period (when you bought the shares).
Whether the gain is short‑ or long‑term (holding period < 1 year = ordinary‑income tax rates; ≥ 1 year = long‑term capital‑gain rates).
Your total taxable income (federal rates, state rates, and any net‑investment‑income tax).

Below is a step‑by‑step, “what‑you‑need‑to‑know” guide for TX NM shareholders who will receive cash.

1. Federal Tax Treatment

Item	Explanation
Event	The cash distribution is treated as a sale of securities. The IRS treats it as if you sold the shares at the cash amount received ($61.25 per share).
Recognition of gain/loss	Gain = Cash received – Adjusted Cost Basis (ACB). ‑ If you paid more than $61.25 per share (or have a lower basis due to previous stock splits, spin‑offs, etc.) you could have a loss. ‑ If you paid less, you have a gain.
Short‑ vs. long‑term	Holding period determines rate: • ≤ 1 year → short‑term capital gain (taxed at your ordinary‑income tax rates, 10‑37 % in 2025). • > 1 year → long‑term capital‑gain rates (0 %, 15 %, or 20 % for most filers).
Capital‑gain rates for 2025 (for most taxpayers)	0 % if AGI ≤ $44,625 (single) or $89,250 (MFJ) and taxable income ≤ $89,250 (single) or $178,500 (MFJ). 15 % for most middle‑income taxpayers (AGI up to ≈$492,300 for MFJ). 20 % on high‑income (AGI > $492,300). 3.8 % Net Investment Income Tax (NIIT) applies if Modified Adjusted Gross Income (MAGI) > $200,000 (single) or $250,000 (MFJ).
Form 1099‑B	The broker will issue a Form 1099‑B (or 1099‑DIV if any dividend‑like component) reporting the cash proceeds. You must report the sale on Schedule D and Form 8949.
Wash‑sale rule	If you repurchase substantially identical TX NM shares within 30 days before/after the sale, the loss may be disallowed (the “wash‑sale” rule).
Capital‑loss carry‑forward	If you have a net loss, you can offset up‑to $3,000 of ordinary income each year (or $1,500 if married filing separately) and carry the rest forward indefinitely.
Estimated taxes	The cash receipt is a realized gain; if the amount is large enough to push you into a higher tax bracket, you may need to increase quarterly estimated tax payments (or adjust withholding) to avoid under‑payment penalties.

2. State‑Level Tax Implications

A. Louisiana (the former AG’s home state)

Louisianan residents owe state income tax on the gain at the progressive rate (2.5 % – 7 %).
Non‑residents (e.g., New York or other state residents) are taxed only on Louisiana‑source income. The sale of a publicly‑traded security is not Louisiana‑source (it is “personal” income), so non‑resident shareholders generally do not owe Louisiana tax on the gain.
Louisiana residents also get a $6,000 personal exemption (for 2025) and may have a standard deduction (~$5,000 for single, $9,000 for MFJ). The gain is added to taxable income after these allowances.

B. New York (if you are a NY resident)

NYC/NY state tax applies on all capital gains. NY’s marginal rates range 4.0 %–10.9 % (2025).
NY also imposes the NYC personal income tax (up to 3.876 % for high‑income earners).

C. Other states

Most states tax net capital gains as ordinary income (e.g., California, Illinois).
States with no income tax (TX, FL, WA, etc.) have no state-level tax on the gain.

D. “Double‑Tax” relief

Most states provide a credit for taxes paid to other states if you’re taxed by more than one jurisdiction. If you are a Louisiana resident who moves to another state, you may get a credit for any NY tax paid, and vice‑versa.

3. Practical “What‑If” Scenarios

Scenario	Tax result
Bought at $40, sold at $61.25, held 2 years	Long‑term gain of $21.25 per share; taxed at long‑term rates (0/15/20% + possibly NIIT).
Bought at $70, sold at $61.25, held 3 months	Short‑term loss of $8.75 per share; can offset other capital gains or up‑to $3k of ordinary income, carry remainder forward.
Bought at $61.25 (cost basis same as sale price)	No gain/no loss – no tax. (But still report the sale on Form 8949, mark as “0” gain).
Held 6 months, bought at $30, sold at $61.25	Short‑term gain of $31.25 per share, taxed as ordinary income (10‑37 %).
Shareholder is a non‑resident of the U.S. (e.g., a foreign investor)**	30 % withholding on the gross proceeds unless a tax treaty reduces it. However, the U.S.‑source capital‑gain tax for non‑resident aliens on U.S.‑stock sales is generally 0 % (no withholding) except when the seller is present in the U.S. for >183 days (treated as resident). Most foreign investors have no U.S. tax on the capital gain, but they may owe tax in their home country.

4. Tax‑Planning Tips Before the Closing

Action	Why it matters
Determine exact cost basis (original purchase price, commissions, any prior spin‑off allocations, stock splits, or return‑of‑capital). Use the broker’s Cost Basis Statement.
Identify the holding period (date of acquisition vs. closing date).
Consider “tax‑loss harvesting” if you have other positions that are in a loss position—sell those before the TX NM sale to offset gains (subject to wash‑sale rules).
If you’re a high‑income taxpayer, consider bunching deductions or making charitable contributions in the same year to lower the taxable portion of the gain.
If you are a non‑resident, check whether a tax treaty reduces any withholding on the cash distribution (e.g., 15 % treaty rate on dividends). Cash proceeds from a stock sale are generally not subject to withholding, but the sale might trigger a “dividend equivalent” in some transactions—consult a cross‑border tax specialist.
For shareholders who want to defer taxes, ask the board if a stock‑for‑stock exchange could be structured (e.g., a “reorganization” under §368). The current proposal is cash‑only, so that isn’t available unless the terms change.
Check your state tax withholding – if you live in a state with high rates (NY, CA, etc.), you may need to adjust your state‑tax withholding or make a quarterly estimated payment.
Keep records: original purchase statements, broker confirmations, and any corporate communications (e.g., the merger proxy or 8‑K filing). You’ll need these for basis, holding period, and any potential “stock‑split” adjustments.
Consult a tax professional before filing, especially if you have: – Significant gain (e.g., > $100 k) – Multi‑state residency or part‑year residency – Complex basis (e.g., inherited shares, stepped‑up basis, or “section 1252” stock).

5. Summary Checklist for the Shareholder

1️⃣ Gather your records – purchase dates, prices, commissions, any adjustments.

2️⃣ Determine your adjusted cost basis for each lot.

3️⃣ Calculate holding period (short‑ vs. long‑term).

4️⃣ Compute gain or loss per share: $61.25 – adjusted cost.

5️⃣ Apply federal tax rates (short‑term = ordinary, long‑term = 0/15/20% + NIIT if applicable).

6️⃣ Add state tax (Louisiana for residents, NY for NY residents, or other state).

7️⃣ Report on Form 8949 & Schedule D (and any state equivalents).

8️⃣ Adjust/Make estimated payments to avoid under‑payment penalties.

9️⃣ Consider tax‑planning opportunities (loss harvesting, charitable contributions, timing of other trades).

Bottom line

Receiving cash for your TX NM shares triggers a capital‑gain (or loss) event that is taxable at the federal level and, depending on where you live, at the state level. The tax rate you face depends largely on how long you owned the shares and your total taxable income. For most shareholders, the key steps are accurately determine your basis and holding period, then apply the appropriate capital‑gain rates (including any NIIT) and state tax rules. Because the numbers can change dramatically with your personal situation (cost basis, residency, other gains/losses), you should consult a qualified tax professional before filing.

Disclaimer: This answer is for educational purposes only and does not constitute tax, legal, or investment advice. Please consult a qualified tax adviser for advice specific to your circumstances.