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

By: TFB

TFB — Tue, 06 Jul 2010 22:22:49 +0000

misshippy – The withholding is just an estimate, not any different from the withholding on your salary. If the withholding is insufficient, you will have to make up the difference at tax filing time. You may owe underpayment penalty and interest as well if the withholding is drastically insufficient. If the company wants to withhold more now, ask them how they will do it. They will likely deduct your paycheck.

By: misshippy

misshippy — Tue, 06 Jul 2010 20:58:32 +0000

RSU question–Sell to Cover– If the company did not sell enough shares to cover the taxes then finds the error what happens now? Do I pay in check or do they deduct my paycheck?

By: TFB

TFB — Thu, 15 Apr 2010 22:46:31 +0000

Paul W – In that case don’t worry about it. See comment #88.

By: Paul W

Paul W — Thu, 15 Apr 2010 19:29:14 +0000

TFB, I filed before reading the posts. My employer did a sell-to-cover.
There is no 1099B entry for this and the vested amt is on W2.
I didn’t put this on Sch-D because there is no 1099B and I thought employer did the sale.

Would IRS know this and consider this my sale?
Should I be concerned about this now that the tax has already been sent out.

By: TFB

TFB — Mon, 12 Apr 2010 02:25:58 +0000

deepesh – I don’t know why your employer included RSU vesting amount in W-2 box 12C. My employer didn’t. The amount is just in box 1. If you are sure it’s RSU, then it is. Whether you have zero gain/loss for your sell-to-cover depends on at what price you sold the shares and whether you paid any commission or fees when you sold.

By: deepesh

deepesh — Sun, 11 Apr 2010 17:40:06 +0000

If RSU is not same as non-statutory stock option then I don’t know why the RSU amount is shown in box 12c under Code V on my W2. I know it is RSU b/c broker’s statement says that and that is what I got from my company.

What do you show on ur return, non-statutory stock option or RSU? I used RSU sell to cover method on my tax return.

By: TFB

TFB — Sun, 11 Apr 2010 02:03:22 +0000

Cathy – I didn’t answer your question because I don’t know enough about it. From what you described, it does not sound like a typical RSU program. So the company gives you a sum of money, let’s call it $10,000. It’s just like a cash bonus. It’s taxed. Where does the tax withholding come from? Presumably from the cash portion? So they send $5,000 to the broker to buy shares and you end up with the shares plus ($5,000 minus tax withholding) in cash? If that’s the case, it has little to do RSU. It’s just straight buy-shares-with-cash.

Your basis in these shares are the total cash you spent on buying the shares plus reinvested dividends. You have to separate the lots into short-term and long-term. List all your purchases and dividend reinvestment by date, # of shares, $$.

xx/xx/xx bought 44 shares with $??
xx/xx/xx bought ?? shares with dividend of $??
xx/xx/xx bought 81 shares with $??
xx/xx/xx sold 130.0677 shares for $?? (1099-B)

Draw a line at the one-year from date-of-sale mark. Allocate your sales proceeds proportionally to the number of shares. Holding period shorter than 1 year is short-term. Longer than 1 year is long term.

By: Cathy J.

Cathy J. — Sun, 11 Apr 2010 00:28:53 +0000

P.S. Turbo Tax says to treat as two different sales and split into how many shares were bought (44 first time 81 second time), but they were all sold same time (130.0677 shares) — so if I do that, none will equal amount on 1099-B, if that makes any sense at all. Sorry I’m so confused.

By: Cathy J.

Cathy J. — Sun, 11 Apr 2010 00:25:31 +0000

TFB, for some reason you don’t answer my posts — I’m sorry if my questions don’t make sense to you. I’m really trying to understand all of this. I don’t know what to call it (RS, RSU ESO, or whatever, and no one I’ve asked seems to get it). All I know is that it’s referred to as an incentive award of half stock/half cash, and the entire amount shows up on paycheck and is taxed; half the company transfers to a broker who buys company stock in our name, and then it’s up to us what we do with it. The 1099-B says Restriced Stock Plan Account on top. I have read all the definitions of stock options, and none simply say that it is given in this way. They talk about vesting, etc,, but we wouldn’t have received award if we weren’t vested. You mention 3 choices (same day, sell to cover, cash transfer) — we weren’t given a choice so I don’t know how to categorize. It seems like it might be considered same day, but I have no idea. In Turbo Tax Deluxe, it asks questions, and confuses me further. Seems like I shouldn’t call it anything to do with an employee stock option, just treat it as if we bought stock ourselves, use cost basis as amount company gave us (bought for us through broker) to buy their stock, and then whatever date we sell would determine short or long-term sale. In our case, it would include both, and Turbo Tax wants me to split it. If I split it, then the numbers that appear on 1099-B won’t be identical to what I input, so that is really where I’m totally confused. I don’t know how to make numbers match since there are dividends which were reinvested and fees, all of which won’t show on my 1099-B. Please answer my questions. Even if I’m an idiot, please just let me know that you can’t help me because I don’t know enough on subject… thanks.

By: TFB

TFB — Sat, 10 Apr 2010 23:31:53 +0000

deepesh – RSU is not the same as non-statutory stock option. Code V in W-2 box 12c is for non-statutory stock options.