The W-2 information about your RSUs is included in your income even if you did not sell any. If you sell some of your vested shares then you have a cost basis because the value has been reported as taxable income. Divide the amount of vested shares by the amount included in your income and this will provide your cost per share. Use this as the cost against the selling price to arrive at your taxable gain (loss).
The fair market value (FMV) of the award is reported on the W-2 either at vesting or when the 83(b) election is made. The 83(b) election must be made within 30 days of the award. It is advantageous to make the election when the stock price is expected to rise before vesting. The election is not reported on the tax return.
- The 83(b) election is a provision under the Internal Revenue Code (IRC) that gives an employee, or startup founder, the option to pay taxes on the total fair market value of restricted stock at the time of granting.
- The 83(b) election applies to equity that is subject to vesting.
- The 83(b) election alerts the Internal Revenue Service (IRS) to tax the elector for the ownership at the time of granting, rather than at the time of stock vesting.
If dividends are received before vesting, they are reported on the W-2. If an 83(b) election is made, dividends are reported on Form 1099-DIV. When the stock is sold the sale is reported on Form 1099-B.
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