Net Unrealized Appreciation

About Net Unrealized Appreciation:

The Net Unrealized Appreciation (NUA) the amount by which any unrealized appreciation on appreciating assets exceeds any unrealized depreciation on depreciating assets. NUA comes into play if the taxpayer takes a total payout from a company retirement plan that includes appreciated stock of the company for which the taxpayer works. Rather than make a tax-free rollover of the entire amount to an IRA, the taxpayer can roll the employer stock into a taxable account and owe tax only on the stock's value when the taxpayer acquired the shares. The net unrealized appreciation that accrued while the stock was inside the plan will not be taxed until the taxpayer ultimately sell the stock. At that point, the profit can qualify for special long-term capital gain treatment. If the taxpayer rolled the stock into an IRA, the tax would be delayed until the taxpayer withdrew the money from the IRA, but all appreciation would be taxed as ordinary income when withdrawn, at the taxpayer top tax rate. Gain in value (appreciation) is not taxed until the property is sold. See collapsible corporation, Former IRC (check if this IRC provision is current here) §341(e)(6).

See also Capital Gain in the American Legal Encyclopedia and Capital Gain in the World Legal Encyclopedia.

See Depreciation in the United States Encyclopedia of Law and Depreciation in the World Encyclopedia of Law.

See Tax Rate and Tax Rate.