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swiftsoni
New Member

How to treat RSUs sold for taxes?

My company awarded me shares of stock (RSUs) this year, for which I was already vested.  But since I didn't fill out a w-9, the brokerage firm sold some shares to cover IRS backup withholding requirements.  So I have a 1099-b which shows the amount of withholding.  I'm following the steps through Turbo Tax to report the sale, but now it is asking me how I obtained them.  I didn't buy them, so are they considered a gift?  None of the other options seem to fit.

1 Best answer

Accepted Solutions
TomYoung
Level 13

How to treat RSUs sold for taxes?

NO, they weren't a gift.  They were compensation earned by the "sweat of your brow", just like a regular cash paycheck.  Instead of cash you got valuable stock, stock that you could immediately sell for cash.  And the value of the stocks you were awarded was included on your W-2.  That is:

COMPENSATION = (GROSS number of shares awarded) x (per share "fair market value" used by broker to calculate the W-2 compensation reported).  Accordingly, your per share basis is the same as that per share "fair market value".

Tell TurboTax you "purchased" the stock - you really did, agreeing to trade your time and effort on behalf of the employer for employer stock - and your purchase date was the date of vesting.  Your per share "purchase price" is the same as the per share "fair market value."

Tom Young

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2 Replies
TomYoung
Level 13

How to treat RSUs sold for taxes?

NO, they weren't a gift.  They were compensation earned by the "sweat of your brow", just like a regular cash paycheck.  Instead of cash you got valuable stock, stock that you could immediately sell for cash.  And the value of the stocks you were awarded was included on your W-2.  That is:

COMPENSATION = (GROSS number of shares awarded) x (per share "fair market value" used by broker to calculate the W-2 compensation reported).  Accordingly, your per share basis is the same as that per share "fair market value".

Tell TurboTax you "purchased" the stock - you really did, agreeing to trade your time and effort on behalf of the employer for employer stock - and your purchase date was the date of vesting.  Your per share "purchase price" is the same as the per share "fair market value."

Tom Young

swiftsoni
New Member

How to treat RSUs sold for taxes?

Thank you, Tom!  That certainly is true.
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