Selling Stock
When can I sell the shares in my account?
You can sell your shares any time after they are allocated to your plan account. Purchased shares are allocated to your plan account as soon as administratively possible after the end of a monthly stock purchase period. However, waiting two years before you sell your stock may provide you with certain tax advantages (as explained in the answer to the question "If I sell my stock, what are the tax implications?") What do I need to do to sell my shares?
Call the AST 24-hour, toll-free number, (866) 860-0367. To sell your shares, you will need your account statement to access the automated system, or you may speak with a Customer Service Representative. If I sell my stock, what are the tax implications?
The answer depends on whether you sell the particular stock during or after the stock holding period with respect to such stock. The stock holding period is the two-year period beginning with your enrollment effective date (first day of your stock purchase period with respect to such stock) or the one-year period from the date you purchased such stock, whichever is longer. • Your stock sale may produce a profit. The profit is the difference between the price for which you sell your stock and your actual discounted purchase price. |
| •If you sell your stock at a profit after the stock holding period, you will generally recognize ordinary income on the lesser of (i) the fair market value of the stock (without discount) on the effective date of your enrollment minus your actual discounted stock purchase price, or (ii) your sales price minus your actual discounted stock purchase price. You will also recognize a long-term capital gain on any further profit. If you hold the stock and sell it at a loss after the stock holding period, you should not recognize any ordinary income and treat the loss as a capital loss. |
| •If you sell your stock within the stock holding period, you will recognize ordinary income on the difference between the fair market value of the stock (without discount) on the last day of the stock purchase period and your actual discounted stock purchase price. You will also recognize a short-term capital gain on any further profit. If you sell your stock at a loss during the required stock holding period, you should recognize ordinary income from the discount and treat the loss as a capital loss. |
| •Depending on your tax bracket, capital gains may be taxed at a lower rate than ordinary income (such as wages, dividends, and interest). The maximum rate at which capital gains can be taxed is less than the highest tax bracket. |
| •You are required to notify Caremark Rx if you sell or transfer your shares within the holding period. When Caremark Rx is notified by you or its transfer agent that you have sold your shares, the appropriate ordinary income will be reported on your W-2 Form. |
Remember, because tax laws are complicated and subject to change, always be sure to consult a qualified tax advisor before selling your stock. What information should I have to make tax time easier?
| •To make tax time easier, you will need to know the following information: |
| •Actual discounted purchase price of your stock |
| •Selling price of your stock |
| •Dates you bought and sold the stock |
| •Market price on date of purchase |
•You must keep your quarterly statements in order to prepare your taxes.
You can also call the AST 24-hour, toll-free number to get this information: (866) 860-0367. |
Copyright © 2006 Caremark Inc.
|
