How did RSU taxation work for lyft’s IPO?

Twitter / Eng
levels.wtf

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Definitely Jack Dorsey
levels.wtf
Apr 21, 2019 5 Comments

For the Lyft employees that got RSUs and were already over the vesting cliff how did taxation work? Was it sell to cover based on the IPO price sold to the underwriters?

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TOP 5 Comments
  • Have gone through this with RSUs at another company, Lyft was likely the same. Depending on how the structure is setup, most companies do double trigger vesting, this means that your stock does not actually vest when you hit your cliff, it also requires a liquidity event, in the case of Lyft, liquidity was IPO.

    At IPO day, all bested shares would count as income at IPO price, Lyft case being $72/share. Your tax burden would be calculated and the correct number of shares, say 40%, would be sold to cover your taxes.

    RSUs are far easier to deal with tax wise than options. When they vest, the full price on day of vest is taxed as regular income
    Apr 22, 2019 3
    • Honeywell / Eng
      that1guy

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      that1guy
      The stock that IPO’d is vested, you have to pay for that. Now it’s like any other investment. If it goes poorly and drops, that’s a capital loss. You can claim that on your taxes to lessen the blow.
      Apr 22, 2019
    • Twitter / Eng
      levels.wtf

      Go to company page Twitter Eng

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      Definitely Jack Dorsey
      levels.wtf
      OP
      I figured but issue here is the lockup and who knows what the price will be. They were taxed on a higher cost basis than what they may be able to sell at.
      Apr 22, 2019
  • New
    CVeng

    New

    CVeng
    Wouldn't they vest after lockup period ?
    p.s I will be interested in knowing this as well. It would be great if someone could explain with an example like
    If someone accepted the offer with RSUs at 50 dollars. The ipo price was 100 and when the employee's stocks vested the RSU was at 40. How will the tax be calculated given that he was given 10,000 RSUs at the time of the offer.
    Apr 22, 2019 0