Do you adjust tax basis to reduce capital gains?

Amazon 1234#
Apr 9 15 Comments

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

comments

Want to comment? LOG IN or SIGN UP
TOP 15 Comments
  • Google azhkys
    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
    Apr 9 10
    • Akamai Technologies blad
      RSUs sold to withhold taxes can't be used for anything. It's similar to tax withheld on your regular paycheck. You don't claim 25% loss because you had to pay federal taxes right?
      Apr 10
    • Google azhkys
      blad that does not align with my understanding. Rsu sold for withholding are part of the cost basis indirectly. Let's discuss over an example.
      Let's say 100 rsu vested in 2017. At the time of vest let's say each share was $10. Your company withholds say $250 for taxes. So you're left with 75 shares that you decide to hold on to. Now when you file your 2017 taxes, it turns out you owe $300 for that sale since you're in a higher bracket. So in 2017 you earned $1000 worth of stock and paid $300 in taxes. Your cost basis is 1000 and not 700 since you already paid income tax on the 1000. It is very tricky and counter intuitive but I read a bunch of articles about this and had to redo a bunch of calculations to get it right. Your cost basis is the fmv of whatever was vested and not just the fmv of the shares remaining after withholding
      Apr 10
    • Amazon 1234#
      OP
      yes ^ is my understanding as well
      Apr 10
    • Amazon 1234#
      OP
      Does brokerage firm report $700 as cost basis or $1000 in 1099 B (assuming 100%) of shares are sold?
      Apr 10
    • Google azhkys
      For withholding income of 1000 is reported on your W-2, I don't think you get a 1099.
      When you later sell what remained on vesting, I think 1099 shows basis as 0 and irs expects you to figure out the right basis and adjust
      Apr 10
  • Akamai Technologies blad
    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
    Apr 9 2
    • Amazon 1234#
      OP
      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
      Apr 9
    • Akamai Technologies blad
      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
      Apr 9
  • Dropbox systest
    In theory, this looks like a short sale? You sell before you buy. Not sure if there are special rules for those
    Apr 10 0