So I reported capital gains per 1099B to my tax consultant. He says I can adjust this further and include cost of RSUs vested this year, thereby reducing capital gains(these shares were not sold). Is this allowed? Unable to find this exact treatment online
Yeah I don't think you can do that. Shares sold this year are part of your regular income (tax withheld) and therefore short term capital gain where as shares from previous years are long term capital gain so you can't adjust the basis there
Have not sold the shares vested this year. Not even a sale.. seems odd that I hear such recommendation from tax advisers. So checking here
Well shares get sold on your behalf on the vesting date. So it does show up as a sale. But all it does is cover your taxes on it similar to paycheck withholding. Some tax advisers are not savy about RSUs and give these random advices
In theory, this looks like a short sale? You sell before you buy. Not sure if there are special rules for those
Iirc if you're not careful you get double taxed on rsu if you don't sell immediately. When rsu vests, a portion is withheld for taxes and you pay income tax on that. Now say you kept the rest of rsu that wasn't sold on vesting and decided to sell 2 years later. You'd think that the cost basis should be the total value of whatever was vested at the time of vesting. However irs doesn't let brokerage adjust the basis and on forms like 1099 basis is reported as 0 incorrectly. The cost basis for capital gains purposes is not zero. It is also not the value per share on vest*num shares you still have. It is value per share on vest date* total number of shares vesting, including the ones sold to withhold taxes
I see that Morgan Stanley and Fidelity report costs basis (not 0). Thanks for explaining. But my question is slighly different.... if i have not sold shares that vested this year, is it right to include the costs of these shares to the cost basis of shares vested years back that I sold in 2018?
You are right that the cost basis is not 0 but it does not include the ones sold to withhold taxes. That only applies if you do not sell shares to withhold taxes but do it from your salary or pay the taxes separately. RSUs vesting on a particular date is like a regular paycheck except instead of a cash payment the proceeds are in the form of your company stock