Comments on: Restricted Stock Units (RSU) Tax Withholding Choices

By: Matt V

Matt V — Wed, 30 Nov 2011 14:36:00 +0000

“When a company issues RSU’s and paysout said to an employee, then buys back the RSU’s when the employee terminates, does the former employee need to be issued a Form 1099 on the buyout since they have already paid tax on the RSU’s via their W2 Form?”

An employee is taxed on W2 at time of vest (unless 2.5-month short term deferral is elected which would tax on W2 at distribution) as ordinary income. If these shares are held and later sold, this would be considered a gain/loss and a 1099 would be issued for the proceeds. You would need your basis (ordinary income show on W2) to offset the proceeds on your Schedule D.

In short, yes, the 1099 would reflect any gain/loss whereas the W2 is the taxable event for employee income.

By: Matt V

Matt V — Wed, 30 Nov 2011 14:29:59 +0000

It depends whether the FMV is below or above the donor’s basis. If the FMV at gift is below the donor’s basis you would have a dual basis. Depending on what price you sell it at, you would use either the donor’s original basis (FMV at sale > donor’s original basis) to determine your gain or you would use the FMV at the time of gift as your basis (FMV at sale < donor's basis) and show a loss. If you sell the stock between the FMV and the donor's basis, there would be no gain or loss.

By: dd

dd — Wed, 30 Nov 2011 01:34:07 +0000

“After you acquire the shares, you can gift the shares to them. They get your basis. Whatever goes up or down afterward will be their gain and loss.”
I thought only gains, not losses can be used when stocks are gifts.

By: Angie

Angie — Tue, 11 Oct 2011 16:25:47 +0000

When a company issues RSU’s and paysout said to an employee, then buys back the RSU’s when the employee terminates, does the former employee need to be issued a Form 1099 on the buyout since they have already paid tax on the RSU’s via their W2 Form?

By: Arkad

Arkad — Thu, 08 Sep 2011 03:34:33 +0000

Thanks for the article TFB.

Can you help define “vest”?

Scenario:
If I live in California for four years and vest my RSUs over that time period, but there is no IPO. A year later move to a state with no income tax and the company IPOs and I sell my share.

Question:
Will California be able to tax me for those RSUs that were earned while I lived there even though the company wasn’t public and I didn’t sell until I lived in Washington.

Thanks!

By: SP

SP — Tue, 26 Apr 2011 01:07:31 +0000

Thanks @TFB and I wholeheartedly agree with @todd about your diligent replies to the posts.

By: TFB

TFB — Mon, 25 Apr 2011 15:54:26 +0000

@SP - They are yours, however, as I explained in the other post No Tax Advantage In RSU, there's no point in keeping the shares after they vest. You are better off selling them and buying something else, unless you think that stock is the best among thousands of other stocks.

By: todd

todd — Mon, 25 Apr 2011 14:13:16 +0000

Thanks for your quick response. I noticed you have been providing excellent service to this site over the last couple years. It’s rare to find someone who manages their website so effectively anymore. I have added this site to my Bookmark Bar. Well done.

By: SP

SP — Mon, 25 Apr 2011 14:09:03 +0000

QQ on what happens to vested RSUs if you leave your company..

In your example, say I use (2) and have paid taxes on vested RSUs and gotten 60 shares. If I leave the company, do I forfeit the right to sell those 60 shares? Or, they are mine – and can sell whenever I want to?

By: Derrel

Derrel — Fri, 15 Apr 2011 03:47:38 +0000

If I use Sell to Cover to pay taxes on RSU’s, am I taxed on the shares that were sold at the time of the sale or at tax filing time?
Thank you.