Cost basis for RSUs

[california1977]

Hello,

I think this has been asked before but a conclusive answer still eludes me. Here's my scenario:

1. Say 100 RSU from my employer vested at $50 each
2. Right on that day and the same price, 30 socks were sold (30 * $50 = $1500) by my employer to pay for taxes. So, I'm left with only 70 vested RSU now.
3. My employer reported $5000 in the W2 as earned income for #1
4. 2 years later I sold the remaining stocks at $70 (70 * $70 = $4900)
5. Now, what is my cost-basis for reporting #4 while filing taxes:
   1. Is it $5000 since that was reported in W2
   2. Is it $3500 since the per stock price was $50 and I had 70 RSU remaining

thanks in advance!

[KrisD15 · Accepted solution]

3,500.

When the stock vested, it was as if you earned 5,000 because of the discount on all 100 shares. 

(50 each) 

You sold 30 right off, for $50 each I assume. So there was no gain. Although you did REALIZE 1,500, there was no gain because 1,500 of the 5,000 was already in Box 2 and taxed. 

Think of it as 1,500 was added to box 2 for 30 shares and 3,500 was added for 70 shares. 

You were paid 1,500 and 3,500, 1,500 was for 30 shares, 3,500 was for 70 shares. 

You sold 30 shares for 1,500, each share had a basis of 50, so 30 shares equals 1,500 basis sold for 1,500. (no gain) 

When you sell the remaining 70, those have a basis of 50 each. Anything over $50 each will be a gain. 

[california1977]

Thanks!

So, if I want to make it even simpler for myself:

• I got $5000 worth (100 * $50) of vested stocks from my company, however say I paid the taxes from my pocket that time
• I sold 30 for $50 each on the vesting day and 70 for $70 each 2 years later, totalling 1500 + 4900 =6,400 
• hence, the capital gain is 6400 - 5000 =1,400

[ThomasM125 · Accepted solution]

Yes, that is correct. The capital gain is the total proceeds less the income from the vesting of the shares. The vesting income is reported as ordinary income by virtue of the wage income listed on your W-2 form.