Yes. It does seem confusing. For reporting purposes, PSUs are RSUs with vesting based on the achievement of future performance conditions. The actual award of PSUs may range from zero to a multiple of the initial target award based on performance achieved.
Your PSU awarded to you is taxable income as ordinary income when these are delivered to you. This called a vest and this is reported on the W2 and taxed as ordinary income.
Also, these are subject to capital gains when you sell these. However, your cost basis in the shares will be their market value when they vest. When you report the sale of your stock, there will be a section there asking you what the cost basis is. Here is where you would enter the market value of the shares. It's not zero. You should receive a form from the employer informing you what your market share is but if one is not provided, you can check historical stock prices to see what the price per share amount was for that particular date or date range.
To address your concern about double-taxation, it may seem that you are double taxed but in reality, you are not. The initial award by which you are taxed is the same thing as purchasing those shares of stock. It's like purchasing these shares of stock on your own.
Now after owning the stock and when you decide to sell, then you are subject to capital gains tax. Think of it like buying and selling on the regular stock market. One of the advantage of PSU and RSU is that these may be provided to an employee at a discounted rate and the market value of the shares may be higher than you actually paid for them. I can see this principle applied to PSU based on performance targets.
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