Tax implications of demutualization
According to the Internal Revenue Service, demutualization often qualifies as a tax-free reorganization, meaning you may not have a tax obligation with your new stock shares. Provided you hold them for a set holding period based on the stock type, you won't have any capital gains to report from the transaction.
On the other hand, if you elect to receive cash instead of stock, it's considered the same as immediately selling the stock back to the corporation, potentially resulting in a capital gain and the associated tax burden. Depending on how long you held your policy or ownership stake before the demutualization, it could be considered a long-term (over one year) or short-term (under one year) capital gain.