Companies sometimes issue bonds that can be converted, at the discretion of the holder, into common shares of the company. In general, conversion will only occur if the fair market value of the common shares available upon conversion exceed the fair market value of the bonds. What are the tax consequences to the holder of such bonds when they exercise their option to convert?

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The Answer of Companies sometimes issue bonds that can be converted, at the discretion of the holder, into common shares of the company. In general, conversion will only occur if the fair market value of the common shares available upon conversion exceed the fair market value of the bonds. What are the tax consequences to the holder of such bonds when they exercise their option to convert?

Companies Sometimes Issue Bonds That Can Be Converted, at the Discretion