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Financial Planning / Tax Strategies


Subject:  Re: Question about restricted stock Date:  9/10/2012  3:21 PM
Author:  ptheland Number:  116578 of 127749

Double check the paperwork on the restricted stock vesting. It's not unusual for the FMV of the vested shares to be included on your W-2 (your wife's in this case) in the year the shares vest.

If that is correct for you, then the cost basis of the shares is that FMV that you already included in your income, and your holding period began on the vesting date. You'll need that when you sell the shares.

Here's an example with easy numbers. You vest in 1000 shares with a FMV of $10 on the vesting date. 300 shares are withheld for taxes, so you actually receive 700 shares.

The W-2 should include $10,000 of additional income for the vested stock. (That's 1000 shares at $10 each.)

A total of $3,000 (300 shares at $10) appear in various withholdings: Social Security, Medicare, Federal income tax, and state income tax (as appropriate).

You received 700 shares with a value of $7,000. That is your basis in the shares.

In a way, it's pretty much just like any other paycheck you get. Except the pay and withholdings start off in shares of stock rather than in dollars.

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