topic Are RSUs sold to cover taxes considered short term gain? in Get your taxes done using TurboTax

Are RSUs sold to cover taxes considered short term gain?

yatoshura — Sun, 28 Mar 2021 07:10:55 GMT

-When some of my RSU were sold on vesting day automatically by Fidelity to cover taxes, will the remaining amount left over from the sell be considered as a short term gain?

-Should my total cost basis be $0 for these tax related RSU sells?

-If multiple RSU grants vested on the same day and each grant had some shares sold to cover taxes, can I consolidate and report all the sells on that day together as a single batch?

Thanks.

Re: Are RSUs sold to cover taxes considered short term gain?

NCperson — Sun, 28 Mar 2021 11:49:01 GMT

the shares that were delivered to you on that date have a cost basis equal to the price of the stock on that date

Until you sell the shares that remain, there is no taxable event. You will receive a 1099-B when you do that.

ps - the shares that were sold to cover the taxes have no tax impact to you. Look at your W-2; the value of ALL the shares that vested is taxable income to you and should be part of your wages.

Re: Are RSUs sold to cover taxes considered short term gain?

yatoshura — Sun, 28 Mar 2021 19:12:14 GMT

The cost basis (box 1e) on my 1099-B is $0 for all the shares that were sold automatically by the brokerage to cover taxes on the vesting day.

Is this cost basis wrong?

How do I compute the quantity of shares that needed to be sold to cover the federal tax?

Thanks.

Re: Are RSUs sold to cover taxes considered short term gain?

NCperson — Sun, 28 Mar 2021 19:21:14 GMT

let me use an example and see if this works out.

Let's say I had 100 RSU's where the restriction ended in 2020. On the day the restriction ended the stock was selling for $20 per share. Therefore my W-2 should have an additional $2000 (100*20) under 'wages'.

The federal, state, social security and medicare withholdings on my paycheck were $400. The brokerage company sold 20 of the 100 shares to cover the taxes ($20 * 20 shares) leaving me with 80 shares with a cost basis of $20.

the cost basis is 80* $20 or $1600.

Given this example, there is nothing on the 1099-B, but there is $2000 on my W-2.

Now let's say I went ahead and sold those shares the next day at $21 per share. I received $1680 in cash ($21*80) and have a gain of $80 ($1680 - $1600). That $80 is a short term gain and would be reported on my 1099-B.

does that example make sense?

I am not clear if you are holding any of the shares anymore......what is in box 1D?