Example Let's say 1000 stocks granted at $100 each 1/4 th (of it vest at 100$) - so 250 stocks vest at $100. My FMV is set to $100 for these 250 stocks A year later i sell those 250 stocks at $50. So, do those qualify as losses of $50 per stock ? I understand if the stock increased in value to say $150 , it would qualify as capital gain , but does decrease in value qualify as a loss ? Can I write off $50 * 250 as losses on my taxes ?
Yes, it is a capital loss. There is a limit on how much you can write off.
Yes, but it wouldn't offset the income tax bill at vest, only other short term gains.
Yes. That's a capital loss. In fact, given a portfolio with a mix of "underwater" stock and stock that's grown, you typically want to sell the stock that has lost value, as it counts as a capital loss (or at least balance out the stocks you're selling so that you minimize your capital gains). This is a strategy called "tax-loss harvesting" (google it),and it's on part of how many wealthy people manage to pay little or no tax.
Yes, you can even write off crypto.
I was under the impression that the price at vest is just straight income. If you hold onto them and it goes up then the difference is capital gain. For example the 1000 RSUs price when joining is $100. At the year cliff you get 250 RSUs at $150. 250 x $150 = $37,500. All of that is income if you sell all 250. If you hold onto them for another year and the price goes up to $200 then the difference between $37.5k and the new price is your capital gain. Am I wrong?
Yes. Except the price can also go down, then it is a capital loss which can be written off up to a limit.
Check your W2 Luke
When an RSU vests, it's entire value is taxable as ordinary income, making that value its new Basis. When you sell it, the difference from that Basis is either a Gain or a Loss
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Yes that would be capital loss