12 RSU's vested in 2016. The company sold 4 for taxes. We did not sell the other 8 shares. Do we pay gain/loss if we did not sell them yet?

[TomYoung · Accepted solution]

What you are describing here is a "same day" sale situation: the stock vested and some (or all) of the stock was sold on the same day. 

Same day sales are extremely common when RSU's vest because the act of vesting creates "compensation", (gross number of shares vested times per-share FMV of the stock), and of course "compensation" creates the need to withhold taxes, hence some shares get sold to raise that cash.  You could have elected to pay the withholding taxes out of your own pocket, in which case you'd now own 12 shares, not 8 shares.

Since you owned the stock when they vested then "you" sold the stock for the taxes.

In a same day sale situation brokers are not required to issue a 1099-B, though they may if they want, and if they don't issue a 1099-B they are required to issue a "statement" of some sort with the "1099-B" information on it.

If you don't get a 1099-B you are not required to report the sale, though you might want to report it anyway because most same day sales create a small loss due to selling commissions and fees.  If you get a 1099-B or if you don't get a 1099-B but want to report the sale anyway, you'll use the "Stocks, Mutual Funds, Bonds, Other" interview available in TTPremier.  TT Free Edition does not support the reporting of stock sales.

Tom Young

[ChristinaS]

Yes, you do.There are 2 components to RSUs:

1/ The tax on getting the shares/ vested value- ordinary income/ W2 income

2/ The tax on selling the shares (sales price less vested value)- capital gain/loss

You don't pay tax on a gain/ loss until they are sold. However, you pay tax on the vesting of the RSUs when they vest.

Lets say the shares were worth $100 each. $1,200 has been added to your W2 income so you pay tax on component #1.

Lets say you eventually sell these 8 shares for $150. At that point, you'll pay a capital gain loss on the $50 gain per share- you won't be taxed again for the fair value of the shares when they vested.

When you enter the sale of the 4 units, the cost basis for each will be the vested market price. You likely also have a commission for this transaction, which frequently creates a small loss on same day sales. If your W2 doesn't clarify the market value of the units that have been built in to your W2, you may need to get that information. You can usually get some form of statement with all the data you need.

Your 1099-B should report a sale of the 4 units, and the sale and cost may be reported as virtually the same amount.

Questions? Please ask.