I called back Fidelity and they confirmed this is a taxable event.  Ticks me off given that as far as I am concerned my intent is to allow the conversion, i.e. my intent is not to sell them.  Seems pretty arbitrary and unfair that the IRS imposes this rule on tender offers.  The net result is that I have not pocketted any gains, if anything I am simply allowing the conversion to happen and any gains are rolled over.

I was also told that the information was included in that massive document we should all have gotten, page 173.  I cannot find the darn doc, I am looking online to see if I can find it