Selling to a Private Buyer: Tax Planning When a Stock Gets Taken Private (Lessons from Titanium)

Hook: You got a take‑private offer — now what?

Getting a take‑private, all‑cash offer like the CAD$2.22 per‑share bid for Titanium Transportation in late 2024 is exciting — a sudden 40%+ premium can feel like a windfall. But shareholders face immediate tax decisions that determine how much of that premium actually stays in your pocket. This guide uses the Titanium deal as a real‑world case study to walk through pre‑sale tax planning, timing techniques, cross‑border withholding traps for Canadian stocks, and a step‑by‑step method to calculate after‑tax proceeds in 2026.

The high‑level, most important points (inverted pyramid)

1. Structure matters: whether the buyer pays cash, shares, or part‑deferred consideration determines immediate tax consequences.
2. Residency matters: where you pay tax — Canada, the U.S., or another jurisdiction — changes who can tax the sale and whether withholding applies.
3. Documentation matters: your adjusted cost base (ACB), purchase records, and brokerage statements are essential for accurate tax calculations and for avoiding unnecessary withholding.

Why Titanium’s deal is an instructive example

Titanium Transportation (TSO/TTNM.TO) was a publicly‑traded Canadian carrier. The 2024 going‑private bid at CAD$2.22 per share — roughly a 41% premium — illustrates common take‑private mechanics: an all‑cash offer from an affiliated buyer group, a sharp market bump on announcement, and a transaction that will likely be structured as a cash purchase or court/plan of arrangement.

For shareholders, that means a taxable disposition in most cases. The deal is a practical lens to discuss:

• How to pre‑position your tax profile before closing
• Which jurisdictions may tax the gain (and when)
• Withholding rules that could tie up proceeds
• How to compute after‑tax proceeds using real‑world numbers

2026 context and recent trends you must factor in

As of 2026, several cross‑border and enforcement trends change the playbook for take‑private sellers:

• Governments continue to expand information exchange (FATCA, CRS) and fund enhanced audit programs — expect faster cross‑border sharing around high‑value transactions. If you need models to forecast cash-flow timing or tax-year impacts when you sell, see AI-Driven Forecasting for Savers for approaches that apply to personal financial timing.
• Private equity and affiliated buyers favored all‑cash deals during 2024–2025; that trend continues, which means immediate taxable dispositions rather than tax‑deferred reorganizations.
• Tax authorities have clarified withholding and clearance procedures for non‑resident disposals (see CRA guidance on dispositions of taxable Canadian property and requirement for clearance certificates).
• U.S. enforcement of foreign asset and foreign income reporting (FBAR, Form 8938) remains a priority; large investors in Canadian take‑privates frequently trigger additional reporting scrutiny.

Step 1 — Identify how the deal is structured (cash, stock, or mix)

The buyer’s form of consideration decides immediate tax rules:

• All‑cash offer: Most common in take‑private offers like Titanium’s. Shareholders generally realize a taxable disposal at closing — immediate capital gain or loss.
• Share‑for‑share exchange or rollover: May permit deferral if the reorganizations meet statutory rollover rules (rare in simple private takeovers, more common in tax‑friendly reorganizations).
• Deferred consideration / earn‑outs / vendor notes: Could create installment sale treatments or interest income; timing matters for when gain is recognized.

Action: Read the offer materials and information circular immediately. If the buyer suggests an exchange or vendor note, ask your tax advisor whether the structure creates an eligible rollover or forces immediate recognition. For modeling different payment structures and their timing, you can adapt frameworks from corporate and creator monetization playbooks like monetization for component creators (frameworks for structuring payouts share useful parallels).

Step 2 — Determine tax residency and likely taxing rights

Which tax authority can tax the sale depends primarily on your tax residency and the nature of the shares.

Canadian residents

Canadian resident individuals report the capital gain to the Canada Revenue Agency (CRA). Capital gains inclusion rate has been 50% for years and remains the focal point of Canadian capital gains taxation as of 2026. If you’re a Canadian resident, calculate the taxable capital gain as 50% of (proceeds minus your adjusted cost base and transaction costs), then apply your marginal tax rate.

U.S. residents

If you live in the U.S., you generally report the gain on your U.S. return (Form 1040, Schedule D). For publicly traded Canadian shares, the U.S. will usually have primary taxing rights for capital gains realized by U.S. residents. However, capital gain calculations must be made in U.S. dollars using the exchange rate on the date of disposition. Foreign tax credits apply if you pay Canadian tax on the same gain.

Other non‑residents

Rules vary. A key concept is taxable Canadian property (TCP). Shares of a Canadian corporation can be TCP if they derive most of their value from Canadian real estate or fit other TCP rules. Publicly listed shares are often not TCP, so many non‑resident shareholders of publicly‑listed Canadian companies face no Canadian tax on disposition. But if your shares are TCP, Canada can tax the gain and the purchaser may be legally required to withhold and remit a percentage of gross proceeds.

Step 3 — Watch for Canadian withholding and clearance certificates

This is where many non‑resident sellers are surprised.

Under Canadian rules (subsection 116 of the Income Tax Act), if a non‑resident disposes of taxable Canadian property, the purchaser is required to withhold a percentage (commonly 25% of the gross proceeds) and remit it to CRA unless a clearance certificate is provided. The seller can apply for a clearance certificate (CRA Form T2062 or related forms) to reduce withholding based on the estimated final tax.

Practical points for Titanium‑style take‑privates:

• If your shares are publicly listed (like Titanium before the transaction), they are typically not TCP for most non‑resident sellers. That generally means no CRA withholding on the sale.
• If your holding is private or the deal changes the classification (for example, the buyer is acquiring an underlying real estate–heavy subsidiary), the TCP rules may still apply. Always confirm.
• If you are a non‑resident selling TCP, start the clearance application immediately; buyers often insist on withholding if the certificate is not in hand at closing.

Authoritative CRA guidance: see the CRA's pages on "Disposition of taxable Canadian property" and clearance certificates (search: CRA T2062 / T2065). If you're non‑resident and the purchaser tells you they will withhold, don't delay — work with a cross‑border tax pro to obtain the clearance certificate or arrange for escrow of withheld amounts. Documentation and archive best practices for records you’ll hand to counsel are similar to the approaches in archival playbooks such as tools & playbooks for lecture preservation and archival.

Step 4 — Timing the sale for tax efficiency

Timing decisions can be worth material dollars:

• Long‑term vs short‑term capital gains (U.S.): For U.S. taxpayers, holding >12 months generally qualifies for long‑term rates (0/15/20%). If the take‑private buyer requires immediate closing, you can’t extend the holding period. But if the buyer offers a tender that can be accepted later, and you’re close to 12 months, evaluate the marginal tax benefit.
• Shifting to a lower‑tax year: If you expect a lower income year next year (retirement, business loss), deferring recognition may reduce tax. Forecasting tools and scenario analysis can help here — see AI-driven forecasting for savers for analogous methods to model timing outcomes.
• Use capital losses: If you have existing capital loss carryforwards, realize gains in the same year to offset them. Coordinate with your tax advisor to ensure the timing aligns with your taxable years.
• Installment reporting: If the buyer makes payments over time (rare for take‑privates that are all‑cash), sellers sometimes use installment sale reporting to defer some tax recognition. Discuss with counsel early.

Step 5 — Compute after‑tax proceedings: a worked example using Titanium numbers

Below are three simplified scenarios using the CAD$2.22 offer. These are illustrative; use your exact numbers and advisors' guidance.

Scenario A — Canadian resident individual

Assumptions:

• Sale price = CAD$2.22 per share
• Adjusted Cost Base (ACB) = CAD$1.00 per share
• Transaction costs = CAD$0.05 per share
• Marginal tax rate on taxable capital gains = 29% (provincial + federal blended example)

1. Capital gain = 2.22 - 1.00 - 0.05 = CAD$1.17
2. Taxable capital gain (50% inclusion) = 0.585
3. Tax due = 0.585 × 29% = CAD$0.1697
4. After‑tax proceeds per share = 2.22 - 0.1697 = CAD$2.0503

Action: gather historical purchase confirmations and broker records to support the ACB. Small differences in ACB materially change taxes when you hold many shares. If you need to build internal spreadsheets and reporting for large holder blocks, practices from corporate analytics playbooks such as the analytics playbook for data-informed departments can be adapted to tax calculations and oversight.

Scenario B — U.S. resident individual (long‑term capital gain)

Assumptions:

• Sale price = CAD$2.22; convert to USD at sale date spot rate (example: 0.75 USD per CAD → USD$1.665)
• Original basis in USD = USD$0.75 (equivalent of CAD$1.00 when purchased)
• Long‑term capital gains federal rate = 15%; NIIT = 3.8%; state tax = 5% (combined top marginal 23.8%).

1. Gain in USD = 1.665 - 0.75 - small costs ≈ USD$0.915
2. Tax ≈ 0.915 × 23.8% = USD$0.2179
3. After‑tax proceeds = 1.665 - 0.2179 = USD$1.4471 per share

Note: If Canada taxed the gain (rare for listed shares sold by a U.S. resident), you could claim a foreign tax credit in the U.S. to avoid double taxation. Keep documentation of any Canadian tax withheld or assessed.

Scenario C — Non‑resident where shares are TCP

If shares are taxable Canadian property, purchaser may withhold 25% of gross proceeds unless you provide a clearance certificate.

• Gross proceeds: CAD$2.22
• 25% withheld at closing = CAD$0.555
• Net received at closing = CAD$1.665 — but your final Canadian tax liability could be lower; you must file a Canadian return to claim refunds or pay shortfall.

Action: apply for a clearance certificate (CRA T2062) early if you believe the shares are TCP and you are a non‑resident. The clearance process can take weeks. If the purchaser insists on escrow of withheld amounts, treat the escrow like other custody arrangements and document it carefully — similar principles show up in operational recovery playbooks such as the multi-cloud migration playbook where escrow and recovery-held assets are managed explicitly.

Checklist: Pre‑closing tax actions for shareholders

1. Confirm consideration type (cash, shares, installment).
2. Document your basis — collect trade confirmations and records for ACB (Canada) or cost basis (U.S./other).
3. Confirm residency and whether shares are TCP. If non‑resident and TCP, start CRA clearance application immediately.
4. Discuss timing with a tax advisor — can you delay acceptance to achieve long‑term status? Do you have loss carryforwards to net?
5. Check foreign reporting — U.S. taxpayers: FBAR/FinCEN, Form 8938, and capital gains reporting; other jurisdictions: local disclosure rules.
6. Prepare for currency conversion — use the exchange rate on the date of disposition and keep proof of rate; forecasting and conversion sensitivity analysis techniques are covered in AI-driven forecasting for savers.
7. Ask about withholding — request written confirmation from the buyer or transfer agent if no Canadian withholding will occur.

Common seller mistakes (and how to avoid them)

• Assuming no withholding is automatic: Buyers may insist on withholding unless a clearance certificate is provided. Don’t assume proceeds will arrive unencumbered.
• Misplacing ACB records: Without accurate ACB, you can over‑pay tax or be unable to prove losses. Back up records and reconcile with your broker.
• Ignoring foreign reporting rules: Failing to report large foreign proceeds triggers audits and penalties. File required FBAR/8938/foreign returns timely.
• Failing to plan for state taxes (U.S.): Many U.S. states tax capital gains; factor state rates into after‑tax calculations. For guidance on state-level and niche tax questions, local tax attorney resources are helpful — see tax-focused commentary like tax attorney notes on property taxes for examples of how specific benefits and improvements can have tax implications.

Advanced considerations for high‑net‑worth shareholders

If you hold a large block of shares, additional levers may be available:

• Block sale negotiations: Large shareholders sometimes negotiate gross‑up adjustments or a mechanism to pay tax gross‑up to cover withholding or to allocate deal consideration more tax‑efficiently. For creative deal constructs and market mechanisms that affect how value is allocated, consider reading broad-market innovations such as tokenized prediction markets (conceptual parallels for structuring participant payouts and allocations).
• Entity reorganization: Holding through a corporate vehicle or trust may change tax timing and rates. Evaluate alternative ownership structures well before a sale.
• Philanthropic strategies: Donor‑advised funds or charitable remainder trusts can be part of exit planning to reduce taxable capital gains and preserve after‑tax value. Monetization and payout structures for creators and owners offer useful planning analogies in monetization playbooks.

These strategies require time and cross‑border expertise. If you’re a significant holder, start planning immediately after the deal announcement.

How to handle buyer communications about withholding

Buyers and their counsel will usually provide instructions to transfer agents about withholding requirements. Your response should be documented:

• Request written confirmation of whether the purchaser will withhold on your sale.
• If you are a non‑resident and the purchaser says they will withhold, immediately submit the clearance certificate application or arrange for escrow details with counsel.
• Keep copies of all communications and closing statements; you will need them for your tax filings. Archival practices from preservation playbooks (see lecture preservation & archival playbooks) can be adapted to retain important tax communications and records.

Recordkeeping and post‑closing filings

After closing, do the following:

• Gather the final transaction statement showing gross proceeds, fees, withholding, and consideration type.
• Convert proceeds and basis into your tax filing currency using the exchange rate on the trade date.
• File required returns: Canada (T1 for residents; T2062 process for non‑residents) and your country of residence (e.g., U.S. Schedule D, Form 8949).
• Claim foreign tax credits where applicable to avoid double taxation.

Final practical takeaways — Lessons from Titanium

"A big premium is only as good as the after‑tax cash you receive. Start tax planning at announcement — not after closing."

• Act fast: Clearance certificates, ACB documentation, and timing strategies require time. Don’t wait until the cheque clears.
• Don’t assume public listing removes all cross‑border risk: while public TSX shares usually avoid withholding, complex corporate structures or carve‑outs can change tax status. Verify.
• Currency and reporting matter: Exchange rates and foreign reporting obligations can materially affect your net proceeds and audit exposure.
• Use a cross‑border specialist: Small errors in classification or withholding can lock up material cash in escrow or trigger penalties for late filings.

Where to go from here — a practical action plan (30‑day checklist)

1. Day 1–3: Read the offer materials; confirm consideration (cash v. non‑cash); request buyer’s written withholding position.
2. Day 4–10: Gather ACB/cost basis, broker statements, and proof of residency; consult a cross‑border tax advisor if non‑resident.
3. Day 11–20: If non‑resident and TCP risk exists, file the CRA clearance application; if U.S. resident, estimate tax and foreign tax credit positions.
4. Day 21–30: Prepare to file required returns post‑closing; prepare FBAR/Form 8938 entries if applicable; maintain copies of closing statements and correspondence.

Final note on future risk — 2026 and beyond

Take‑private deals are likely to remain a favored exit route for undervalued public companies into 2026. Governments will continue to tighten cross‑border information flows and enforcement. That means timely pre‑sale tax planning and impeccable recordkeeping are not optional — they are essential to preserve your gains.

Call to action

Facing a take‑private offer like Titanium’s? Don’t leave tax on the table. Get a fast, personalized tax impact estimate — upload your trade confirmations and deal documentation to our cross‑border tax team at incometax.live for an evidence‑based after‑tax proceeds calculation and a prioritized action plan. Time matters in take‑privates; act before closing.

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