Hi! Thank you for your advice!
I am an employee at my first public tech company, and was granted stock as part of my comp. It vests over 4 years, and I am coming up on my 2nd year, when the newly vested shares will automatically get transferred to me. It’s lost value since it was initially granted. Even though I’m not cashing out on the stock and plan to just hold it in Fidelity, is there a way I should be filing my taxes so that I can maximize my losses, or does that only occur when I actually sell the shares for cash? Thank you for your advice!
Thank you for this question! In most companies with vesting shares, you will pay tax on the value of the stock when it vests or when you take complete ownership. At that point, the vested stocks are seen as compensation, and you will pay tax on the stock you received at their current value. One way to get around this is to leverage section 83(b). However, this election needs to be made within 30 days of receiving the shares, which is too late for your current stock but may be an option for future stock. I’ll add a link for this section below for reference. I’ll also add a link to our review of Stock Grants and RSUs since this is a complex topic for everyone.
Just one additional note: once you sell the stock, you will have a long or short term capital gain or loss depending on the price that you paid when they vested compared to the selling price. Each of these types of gains/losses may be beneficial to your current year tax outlook depending on your goals. Give TurboTax a call anytime and we can review the impacts with you for each scenario.
Have a great day!
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