medium · Certified Financial Planner Retirement

If he elects Net Unrealized Appreciation (NUA) treatment, which statement best describes the tax consequences?

1. He avoids all immediate taxation and pays long-term capital gain tax on the full 500,000 when sold.
2. He pays ordinary income tax on 140,000 now, and growth is taxed as long-term capital gain when sold.
3. He should roll the stock into an IRA to defer the ordinary income tax on the entire 500,000 balance.
4. He pays ordinary income tax on 500,000 now, with all future growth being tax-free.

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