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How could a preferred share valued at $2.50 per share be convertible to 100,000 shares of common valued at the same price per share? Clearly the preferred share should have a MUCH greater value no?
But anyway, Im no expert but I believe you will pay tax on the value of the preferred shares you receive (ie 200 x $2.50). Then if you convert your tax basis will simply increase but you will not pay any additional tax until you sell the shares.
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