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loopless
Level 2

Restricted Stock Units, delivered , but can't be sold until 2022

I have slightly unusual rules covering a Restricted Stock Award from my company. The company set up a schedule where  stock is "delivered" yearly on a specific date, but the stock is still restricted such that it cannot be sold until the final delivery (in 2022). If I left the company now, I would still own the stock delivered up to today, but I still cannot sell any of that stock until what would have been the date of the final delivery in 2022.

So when is the 'taxable' event? When I can actually sell any of stock (in 2022), or is it/was it when the stock was 'delivered' to me. 

6 Replies
Mike9241
Level 15

Restricted Stock Units, delivered , but can't be sold until 2022

A Restricted Stock Award (RSA) is a grant that permits you the right to purchase shares at the fair market value, a discount, or at no cost.

As RSAs are purchased on the grant date they are therefore subject to tax from the date of grant. 
RSAs usually have time-based vesting conditions. 
Termination: Unvested RSA shares are subject to repurchase upon termination. 
RSAs are eligible for 83(b) elections. 

see this link for a discussion about the 83(b) election

https://www.cooleygo.com/what-is-a-section-83b-election/ 

Miran
Employee Tax Expert

Restricted Stock Units, delivered , but can't be sold until 2022

Restricted stock (not to be confused with a restricted stock unit, or RSU) is typically awarded to company directors and executives who then own the stock at the end of the vesting period.

Also called letter stock or Section 1244 stock, a restricted stock award comes with strings attached. For example, it cannot be transferred and it may be forfeited if the recipient fails to meet expectations.

Unless you made an 83(b) election, don't report a restricted stock award. In fact, you won't report anything until the stock vests. However, if you have an arrangement where you receive dividends on the award prior to vesting, the dividends should be included in box 1 (wages) of your W-2.

If you did make a Section 83 (b) election your employer will report the fair market value of the award in box 1 of your W-2 and any dividends will be reported on Form 1099-DIV.

Once you're fully vested, the stock is all yours. If you sell any shares, you'll get a 1099-B from your brokerage like you would with any other stocks.

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loopless
Level 2

Restricted Stock Units, delivered , but can't be sold until 2022

I suppose I am not clear on the difference between a RSA and a RSU.

 

I have been awarded stock in the company in three blocks (on a yearly schedule). Two of these blocks have been delivered to me. I own these stocks ( they have vested)  but with the important  restriction being I cannot sell any until the date the third block would be delivered - this is called the 'holding period'. When the holding period expires I can sell the stock.

 

So is the taxable event when the shares vested or when the so-called holding period expires

 

I would note that meaning of the term  'holding period' above is different to how it is used normally when talking about RSAs. Normally 'holding period' means simply the period in which the person holds the shares after vesting and can sell them as they like.

 

 

I am not using a 83(b) election.

Mike9241
Level 15

Restricted Stock Units, delivered , but can't be sold until 2022

we can't tell you whether you got RSU's or RSA's. ask your company because there is a significant difference in how taxes work for each.

loopless
Level 2

Restricted Stock Units, delivered , but can't be sold until 2022

Based on my reading , they are RSU

loopless
Level 2

Restricted Stock Units, delivered , but can't be sold until 2022

So any more comments. My shares are RSU's - I now own 2/3 of them, but cannot sell them until 2022. My assumption is that because I can't freely sell those shares, then it is not a taxable event until 2022.

 

To add one more complication, my company is foreign and trades on the Paris Stock Exchange. So although the brokerage ( based in Paris) must make sure any transactions follow US Tax regulations ( they will deduct tax due for any transactions for US citizens), they do not have  the same automated reporting and issuing of tax forms of a US brokerage.

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