a new company bought mine and gave a check for the previous stocks we held, what can I do w/o being penalized?

Question

I want to know if I can avoid being taxed for early withdrawal by rolling into an IRA or something else.

this wasn't by choice. The new company made the decision. Why should I be penalized at tax time.

Answer 1

If the stock was in your company's 401(k) plan then you can roll it over. Do not cash the check, just take it to your bank and ask them to open an IRA Rollover account for you and deposit the check in that account.

If the stock was in an employee profit sharing plan or employee stock option plan then you may have no choice. This is considered a buyout and you will be taxable to the extent you have not been previously taxed for these grants. If you have paid no previous taxes on this stock then you will have to figure out what the cost basis of the stock was at the time it was granted to you and declare that as ordinary income and the appreciation from the cost basis to the buyout value will be taxed a capital appreciation. Long term if held for more than 1 year and short term otherwise.

Answer 2

This isn't an early withdrawal, it's just a stock buyout. It's fully taxable in the year that the buyout occurs.

You can do whatever you want with the proceeds but it's not going to stop the tax on the sold shares.