If an investor uses a conversion provision to exchange his debt securities for common shares in the same company, there is a rollover provision which can prevent any excess of the value of the common stock over the value of the debt security from being subject to tax.

Question

Quizplus · Accepted Answer

This is true. The rollover provision allows the investor to defer any tax on the gain resulting from the conversion until the sale of the common shares.

If an Investor Uses a Conversion Provision to Exchange His