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Would you not want to sell stock you have held for some time to take advantage of lower capital gains - or do the US tax authorities assume you are selling olde

Would you not want to sell stock you have held for some time to take advantage of lower capital gains - or do the US tax authorities assume you are selling older stock first?

garmaine 9y ago
It is taxed as income regardless at the point of vesting.
- walshemj 9y ago
  I think the op was saying that you already owned the stock - that now becomes worth 1,000,000 and presumably would have paid income tax for the FY when you vested. You surly don't pay income tax on the gain of already owned stock but CGT. Back in the day 2000's I did own stock that was worth over 1,000,000 certainly wouldn't have had to have paid income tax if we had been bought out at point - but that was in the UK
  - garmaine 9y ago
    This subthread is about selling at point of vesting. Unless you are a founder with a 86(b) election, when you vest it is income.
sokoloff 9y ago
RSUs are taxed as income when both vested and released (generally simultaneous). From then forward, gains are capital gains from a basis of the value that was taxed as income. With respect to lot identification (what shares did you actually sell for tax purposes), within an account, most brokers will let you elect specific lots or FIFO and I believe the IRS allows you to elect average basis. (There’s no particular advantage to making that election, IMO, so I never looked into it but vaguely recall that being the case.) Across accounts, except for wash sale treatment, the IRS does not assume that when you sold in account B that you were selling shares acquired in account A.
frostmatthew 9y ago
If you sell right when it vests there's a negligible capital gain (or loss). The value of the RSUs are taxed at regular income when they vest. Any difference between that value and the value when you sell them is a capital gain (or loss) and that is what's subject to capital gain taxes. i.e. if you sell once they vest the capital gain/loss is essentially zero (because the stock hasn't had time to move much) e.g. if your RSUs are valued at $1000 when they vest and you sell it a few minutes later and the value is now $1005 you'll pay regular income taxes on $1000 and have a $5 capital gain (i.e. when you file your taxes the cost basis for the holding are $1000, not $0)

Would you not want to sell stock you have held for some time to take advantage of lower capital gains - or do the US tax authorities assume you are selling older stock first?

garmaine 9y ago

It is taxed as income regardless at the point of vesting.

walshemj 9y ago
I think the op was saying that you already owned the stock - that now becomes worth 1,000,000 and presumably would have paid income tax for the FY when you vested. You surly don't pay income tax on the gain of already owned stock but CGT. Back in the day 2000's I did own stock that was worth over 1,000,000 certainly wouldn't have had to have paid income tax if we had been bought out at point - but that was in the UK
- garmaine 9y ago
  This subthread is about selling at point of vesting. Unless you are a founder with a 86(b) election, when you vest it is income.

sokoloff 9y ago

RSUs are taxed as income when both vested and released (generally simultaneous). From then forward, gains are capital gains from a basis of the value that was taxed as income. With respect to lot identification (what shares did you actually sell for tax purposes), within an account, most brokers will let you elect specific lots or FIFO and I believe the IRS allows you to elect average basis. (There’s no particular advantage to making that election, IMO, so I never looked into it but vaguely recall that being the case.) Across accounts, except for wash sale treatment, the IRS does not assume that when you sold in account B that you were selling shares acquired in account A.

frostmatthew 9y ago

If you sell right when it vests there's a negligible capital gain (or loss). The value of the RSUs are taxed at regular income when they vest. Any difference between that value and the value when you sell them is a capital gain (or loss) and that is what's subject to capital gain taxes. i.e. if you sell once they vest the capital gain/loss is essentially zero (because the stock hasn't had time to move much) e.g. if your RSUs are valued at $1000 when they vest and you sell it a few minutes later and the value is now $1005 you'll pay regular income taxes on $1000 and have a $5 capital gain (i.e. when you file your taxes the cost basis for the holding are $1000, not $0)