Selling stocks

Amazon blueshift
May 28, 2018 24 Comments

This might have been discussed before but i couldn't find the answer upon quick search.

When selling stocks (AMZN on Morgan Stanley), which one of the options below would make more sense assuming the same number of stocks is sold:

1. Selling RSUs that just vested (so that capital gains are almost non-existing hence no additional tax burden)

2. Selling RSUs that vested first chronologically that are older than a year (to pay at most 20% in tax on the capital gains)

Also would selling too much stock in one year place you in an upper bracket or it typically doesn't matter much? Do you pace selling your stocks from an income/tax perspective?

PS: Trolls welcome to participate

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TOP 24 Comments
  • Facebook skurk
    You're seriously trying to avoid capital gains tax by not having capital gains?
    May 28, 2018 3
    • New / Eng rNvT32
      Agree. Seriously! I can't believe people still don't get what is capital gains tax
      May 28, 2018
    • Amazon blueshift
      OP
      Would have been a fair point skurk except that you're missing the progression of AMZN stock. The earlier stocks i have vested at 400$. Stock now is at 1600. Your point would have been valid if I was expecting the stock to go up to 6400 or even cross 2000 soon for the newly vested stocks which I don't.
      May 28, 2018
    • Google ErHa34
      Assuming the number of vested stocks and the number of stocks to sell doesn't change. I don't see this comment being valid. She's not forgiving capital gains, because that'll be the same regardless of whatever stocks they choose to sell.
      May 28, 2018
  • New
    Mika18

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    Mika18more
    You already got most of income recognized at the moment of vesting, so only additional capital gain will be added to your AGI. It is more the question what is your plan for remaining stocks - if you are going to sell just a little bit and keep rest - option 1 is a way to go.
    May 28, 2018 1
    • Amazon blueshift
      OP
      Thanks. Indeed, AGI is set upon vest but given I expect around 80k of capital gain on the old ones, I wasn't sure whether it makes sense to pay tax on them in one year or spread them across several. My plan is to sell around 1/3 of the stocks and leave 2/3.
      May 28, 2018
  • Google googl-chan
    Auto-sell and diversify.
    May 28, 2018 5
  • Pure Storage DAJNMU
    Don't hold RSUs after they vest, unless you would take a cash bonus and buy company stock with it. Because that's what you're doing when you hold vested RSUs.

    So my suggestion would be to sell all the vested RSUs you have and put the proceeds in betterment or something like that.
    May 28, 2018 3
    • Amazon blueshift
      OP
      Thanks. Have you had an experience with betterment (I guess you meant the company?). I'm not that familiar with what they do.
      May 28, 2018
    • Amazon / Eng Cleaner
      Betterment basically invests your money, and they charge you a small percentage. That’s it. You don’t need to spend time managing your portfolio.

      I use Robinhood, but that requires some more attention.

      In any case, the central point is to invest that cash from vested RSUs according to your risk profile and investment goals, rather than in just one stock, unless that’s what you want.
      May 28, 2018
    • Pure Storage DAJNMU
      Yes - they are good and cheap. Since you are not an investment expert, don't try to get fancy. Sell all your RSUs as soon as they vest, and invest in a simple, low-cost, diversified portfolio. That gets you 90% of the way there. Just put your investable money in betterment (or wealthfront) and don't worry about it.

      You might also want to talk to a financial planner about how to save for your goals (buy a house, retire, etc). I'd recommend a fee-only planner who charges by the hour. Just get a simple plan that you can follow on your own.
      May 28, 2018
  • Microsoft jeff12345
    Yeah it will place you in a higher tax bracket. In Fidelity, you can select the shares you want to sell...makes the whole thing easier. I would just sell the older shares. As for #1 (I am not a tax person), but I think the withheld stock is just the required; you could owe more. This all could be different with the Trump tax plan.
    May 28, 2018 2
    • Intuit 1600club
      The tax brackets are getting a big overhaul...

      You pay income tax when RSU vest so your cost basis should be pretty high.
      May 28, 2018
    • Amazon blueshift
      OP
      Thanks.
      May 28, 2018
  • Google jghyrh
    Follow up question:

    Of your long term capital gain stock, would you sell the oldest (lowest cost basis assuming growth) and pay the highest tax, or sell slightly more recent (but still long term) and pay lowest tax?

    Intuitively, I'm thinking the latter, since paying less now means you can theoretically invest the difference, but maybe there are other nuances.
    May 28, 2018 1
    • Pure Storage DAJNMU
      Just sell it all right now and pay the capital gains tax, and put it into a low fee diversified investment account. I'm sure you'll still have enough exposure to your company's stock.
      May 28, 2018
  • 2 (only those that are older than a year), followed by 1
    May 28, 2018 1
    • Amazon blueshift
      OP
      Thanks. That's what I was thinking too.
      May 28, 2018
  • eBay akpman
    RSU that had higher vesting price are riskier if price goes down. If you must sell one batch, go with the latest vested.
    May 28, 2018 0