Sunday, March 31, 2013

How to deal with RSUs

RSU stands for Restricted Stock Units.
Tons of details here.

To the point... Imagine I got 167 Awards/Units Granted. At the vesting date, employer uses 52 to pay the tax and I get to keep the rest, 115 "total shares available (delivered)". In governments eyes, you got 167*$32.18 (share price at vesting)=$5374.06. So, this shows up in your W-2. The brokerage already took some of those shares and sold them to pay for the tax (52*$32.18=$1673.36) and the rest (115) are now real shares at the account, which figure like if they were bought that day (remember this day for the time you sell them). Basically, this is called a Sell to Cover. Probably best would be Same Day Sale but anyhow:

Basically this is like the company giving you the cash at the date of the vesting, so, ordinary income. As this happens in the brokerage that your company has chosen, the whole earnings/taxes are already included in the W-2. So, you got to do nothing, not even enter a fake line with buy/sell for the same price! You should see in your W-2, under the box 12, a "V" case declaring the total amount (all the shares x price at vesting):

Of course, keep track of the purchase price. Now it is like any other stock purchased at that price and date. You'll have to pay/get tax/loss depending on when you sell and the price at the time. Notice that according to this one can't use 83b trick for these.

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