Hi,
My company is being taken over by a larger company. As part of the merger my ESPP shares which I currently own are to be convertrd as follows. For each share in my company that I currently own I will be paid $6.25. I have 1044 shares so I'll be getting $6525. In addition each share I currently own will be converted into 0.35 of a share in the merged company, once the merger is completed. My question is how do I report the $6525? Is it taxed as income or capital gains?

Thanks.