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Level 2
posted Feb 16, 2025 9:30:53 AM

How to calculates Cost basis for RSU allotments

My W2 reported 3956.46 in Box 14 as RSU. Now I am looking at 1099B from E*Trade, to calculate the cost basis. At the time of vesting, employer sold almost 1/3 of total shares to cover the taxes. This meant 2/3 of the shares were ultimately credited to my account. When I import 1099B, it is increasing my tax liability which seems like a double taxation, since taxes were already withheld at vesting.

 

So here is an example:-

If 30 stocks each at current market value of $10 (for a total of $300) vested and employer sold 10 of theses shares and withheld proceeds ($100) for taxes (crediting 20 stocks in my trading account) then what is my cost basis for this event ? I am guessing my cost basis is still $300 ?  

I need to find this to key in the same number in TurboTax in "Box 1e - Cost or other basis".

I have not sold these shares, so again I am assuming, there is no loss/gain as yet.

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1 Best answer
Expert Alumni
Feb 24, 2025 1:08:57 PM

There is no double taxation because you will adjust your cost basis for the sales. 

  • The buy and sell will be basically the same dollar amounts due to the sale occurring when you were awarded the shares. (Income reported on your W-2, as well as federal withholding paid for you).  
  • The income reported in you W-2 is the amount that becomes your cost basis (and any money you might have paid as a discounted amount for the shares).
    • Example Scenario: 10 shares sold will have a $100 cost basis for you and same sales price (amount awarded plus any discount cost to you, if any)  the balance, $200, will be the cost basis of the ones you still hold

Restricted Stock Units (RSUs) is an award granted and given to high ranking employees.  Rights are restricted until shares are vested.  Vesting occurs after the passage of time or performance criteria are met. Shares are forfeited if the conditions are not met.

1 Replies
Expert Alumni
Feb 24, 2025 1:08:57 PM

There is no double taxation because you will adjust your cost basis for the sales. 

  • The buy and sell will be basically the same dollar amounts due to the sale occurring when you were awarded the shares. (Income reported on your W-2, as well as federal withholding paid for you).  
  • The income reported in you W-2 is the amount that becomes your cost basis (and any money you might have paid as a discounted amount for the shares).
    • Example Scenario: 10 shares sold will have a $100 cost basis for you and same sales price (amount awarded plus any discount cost to you, if any)  the balance, $200, will be the cost basis of the ones you still hold

Restricted Stock Units (RSUs) is an award granted and given to high ranking employees.  Rights are restricted until shares are vested.  Vesting occurs after the passage of time or performance criteria are met. Shares are forfeited if the conditions are not met.