Tax withhold during IPO

Airbnb heyha
May 11 11 Comments

Lyft, Uber, pins, what is ur tax withhold rate for ur RSU shares. I recently learned if price drop, u have to pay additional for the tax if the withhold ratio is low. Say u sold 30% at IPO price 100, then u owe 10% at price 100 to IRS if ur tax rate is 40%. If after 6 moths, stock cut half, u actually have to sell 20% to cover the owned 10% tax to IRS. Is there any way to get around with it.

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TOP 11 Comments
  • Airbnb heyha
    OP
    Capital loss is only 3k a year, if ending up losing 100k, there is a lot of years to get back
    May 11 2
    • Facebook уes
      Unless you are actively exiting other positions with gains to offset
      May 11
    • Airbnb heyha
      OP
      That is good strategy
      May 11
  • Uber ipoMoneys
    Other way is to workout a plan with IRS to pay it over years and hoping the stock recovers in that time.
    May 11 0
  • Lyft Automoto
    I had the exact same concern and asked our equity team a month ago. All they kept saying was, we will withhold only ~40% (fed+state+social+med) and that can’t be changed unless the vesting is over a million. I showed them the math and explained but they don’t seem to care.
    You can talk to your professional tax consultant but I don’t think they can do any miracles.
    May 11 1
    • Airbnb heyha
      OP
      40% seems high enough
      May 13
  • Microsoft pollpull
    Do you pay any tax on the vested RSU if the company is not IPO?
    May 11 1
    • Pinterest Xyzabv
      Tax obligation is in effect once the stocks are transferred/released (not only vested) to you. For RSUs I haven’t seen an example where the release happens before the IPO, as it would incur a large tax bill which stocks can’t be sold to cover.
      May 12
  • Lyft alqt61
    Capital gains /losses basically make it fair
    May 11 0
  • Apple / Eng gtUh6$
    Don’t they take out a percentage of the vested RSU at IPO time??
    May 11 0
  • OpenTable Meliodas
    Sell what you need at vest to cover the tax liability.
    May 11 0