Comments on: Restricted Stock Units (RSU) Sales and Tax Reporting

By: mpub

mpub — Thu, 11 Mar 2010 00:32:47 +0000

Thank you for your information. It is very helpful and easy to understand

I have 1 question for you on the sample of SELL to COVER

since you have 59 shares left for future sellable, what happen if you sell 20 shares for your own use out of 59 shares on the same year with 41 shares (sell to cover tax)

how do you report on turbo tax premier (turbo tax suggested I use premier version instead of deluxe)?

I entered as follow:
100 shares vested
41 shares sell to cover tax (E-trade sold 41 shares on separate transactions- 39 shares and 2 shares on 1099B)
sold additional 20 shares on the same year for extra spending.

I entered 20 shares vested and sold 20 shares but turbo tax increase my income as 20 shares * 50 as my net proceed on W-2

please advise

thanks

By: TFB

TFB — Sun, 07 Mar 2010 02:57:59 +0000

Lisa – You should report each lot separately.

Mike – Double check your W-2. It should include the value of the vested shares as income and the value of the sold shares as tax withholding. If you are sure it’s wrong, contact your employer’s payroll department.

By: Mike

Mike — Sat, 06 Mar 2010 23:05:45 +0000

A portion of my restricted stock vested and my employeer sold shares to pay the taxes. The remaining shared are transferred into my e-trade account. My w-2 included the sold to cover the stock but does not include the value of the remaning stock. Do I need to report the remaining stock as income?

Thanks,
Mike

By: Lisa

Lisa — Tue, 02 Mar 2010 19:51:56 +0000

I believe I understand everything that you have said. Thank you for that. My question is…I sold 847 shares. The shares were acquired on different dates. Do I have to input them in turbo tax by the different acquisition dates? Thanks again.

By: Claudia

Claudia — Sun, 28 Feb 2010 06:42:10 +0000

When my RSU vested, I used the option to sell all shares. My company used a broker so I’ve just received a 1099B that lists the gross proceeds instead of the net proceeds (as your “RSU sales and tax reporting” post suggests).
Where can I report the broker fees?

Thanks!

By: TaxBozo

TaxBozo — Thu, 25 Feb 2010 16:08:36 +0000

My company issued me several RSU grants throughout the year. For each one, they sold to cover. The records that came back from the broker has the sell-to-cover transactions arranged in FIFO order, so for example:

Grant 1: 2/1/2009 100 shares, 40 are sold to cover from grant 1 lot.
Grant 2: 3/1/2009 100 shares, 40 are sold to cover from grant 1 lot.
Grant 3: 4/1/2009 100 shares, 40 are sold, 20 from grant 1 & 20 from grant 2.
Grant 4: 5/1/2009 100 shares, 40 are sold to cover from grant 2.

This style of reporting seems to contradict the simplified tax statement you have above, and considerably increases my tax liability over these sales. I have heard a rumor at work that I can ignore the broker reports because the sales were made to obviously cover taxes for each grant, and this is adequate documentation of lot allocations so that I can claim them as:

Grant 1: 2/1/2009 100 shares, 40 are sold to cover from grant 1 lot.
Grant 2: 3/1/2009 100 shares, 40 are sold to cover from grant 2 lot.
Grant 3: 4/1/2009 100 shares, 40 are sold to cover from grant 3 lot.
Grant 4: 5/1/2009 100 shares, 40 are sold to cover from grant 4 lot.

Is this adequate documentation? (I only have email from my employer and the RSU contract that state this.)

TaxBozo

By: Bruce Brumberg

Bruce Brumberg — Mon, 22 Feb 2010 02:52:13 +0000

With restricted stock units, the biggest sources of confusion arise when companies use automatic share withholding for the taxes. Instead of getting all the shares granted, you just get the net shares.

For example, instead of getting the 1,000 shares in the grant, you only get 750 in your account. You are still taxed on the value of the 1,000 at vesting and need to remember when you eventually sell the 750 shares, that you use the cost basis for this number of shares and not the 1,000 shares.

By: Jeremy

Jeremy — Tue, 16 Feb 2010 00:34:50 +0000

Very helpful information here, thank you. I do have the same question as confused on 7/18/2009 though. If the value of the vested RSU’s is added to my wages for the year they vest, some shares sold automatically to cover taxes and I then later sell the remaining RSU’s, aren’t I being double taxed when I then report the sale on my Schedule D?

By: TFB

TFB — Sun, 14 Feb 2010 01:52:27 +0000

tcmocca – You allocate the proceeds to each lot and treat them separately.

By: tcmocca

tcmocca — Sat, 13 Feb 2010 23:38:23 +0000

How do I determine the cost basis for Restricted Stock Units where a single sale consists of multiple acquisition dates and acquisition prices?