Court Case Puts Crimp in Tax-Saving Maneuver

You own stock in a company that's about to be taken over in a cash-only deal. The sale of your stock to the acquiring company will trigger some hefty capital gains, so you decide to donate your shares to charity. Bye, bye capital-gains liability. Hello tax deduction.

Not so fast.

A recent tax court decision will limit taxpayers' ability to use this altruistic maneuver to avoid taxes resulting from all-cash takeover deals. In a case decided in April, the court ruled that such a charitable donation should have been made very early in the takeover process -- before 50% of the target company's shares were tendered to the acquiring company. Previously, it was assumed that shares could be donated anytime before the target company's shareholders voted on the merger. ...