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Subject:  Re: Selling company stock in a 401K Date:  5/20/2010  1:25 AM
Author:  TMFPMarti Number:  110465 of 127546

Can a 401K distribution from company stock be taxed as a capital gain instead of ordinary income tax? What is this called and what is the IRS publication?

It's call Net Unrealized Appreciation (NUA), and you can read about it in IRS Pub 575.

Also, can I sell/buy-back now and wait for higher prices to take advantage of this little-known provision? It is mainly a loss currently.

I suppose you could, but what's the point? The loss took place within a retirement account, meaning you lost money that has never been taxed, meaning there's no loss to recognize on your return no matter what you do.

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