Tax implications of depreciating RSU
Nov 22, 2021
137 Comments
Can someone describe what will happen from a tax point of view, I am new to RSU and not sure how they work and have never seen a scenario like this -83% drop from ipo ($WISH)
If I make $180k Base / 400k RSU Which I got at $17, what will happen if the price on my vest date is $4 (-75%) next April?
Will my W2 show that I make 180 + whatever my first year vest date is? What are the tax implications? Do I claim any losses or is it still a net profit since they were awarded to me
PS - know I should have a tax advisor, but I am trying to find one, just looking for some advice for people who had depreciating RSU’s before
#wish
comments
Then, whenever you decide to sell the stocks, your cost basis will be $4. If you sell it for less/more than $4 anytime after your stocks are vested, you can claim loss/profit on the difference between $4 and the selling price.
So say you get 100 shares vesting, FICA will be withheld, supplemental rate will be withheld and you will get about 72 shares. You paid the withheld tax in shares automatically. Now you sell and if you do so immediately there is limited to no change in price. If you hold and sell later capital gains rules apply (less than a year taxed as income, more than as long term cap gains. Your cost basis is vesting price)
Using your example, $4 * number of vested shares.
If I joined back then I might not feel that bad, since stock prices were only around $60/share July 2020.
Instead I joined back mid-February when prices were around $180/share.
And prices have been falling ever since. I was willing to bare with it for a while, thinking the market has just been volatile and they'll pull through eventually. Then they closed out ZO and stocks have fallen even further, as has my confidence it will ever get back where it was.