Restricted Stoc Unit

[Gary]

My client received a Transaction Confirmation from Fidelity. RSU was granted on 11/15/2010. FMV $48.43. Date of distribution 11/15/2012. 29 shares were distributed and 10 shares netted to cover tax withholding.

Market Value at Distribution $1404.47

Explanation of Proceeds

Federal $367.02
Social Security $58.99
Medicare $20.37
State tax $37.92

Do I assume that these values were included in her 2012 W-2 so that there is nothing else I need to include in her tax return?

Please help.

[Matt Sova]

Rsu

Since there are withholdings it is added to the W-2. However, there is usually a 1099-B. Then you would take the sale price on the 1099-B and use the amount added to the W-2 plus the cost of the stock as the basis.

[Burke]

My client received a Transaction Confirmation from Fidelity. RSU was granted on 11/15/2010. FMV $48.43. Date of distribution 11/15/2012. 29 shares were distributed and 10 shares netted to cover tax withholding.

Market Value at Distribution $1404.47
Explanation of Proceeds
Federal $367.02
Social Security $58.99
Medicare $20.37
State tax $37.92

Do I assume that these values were included in her 2012 W-2 so that there is nothing else I need to include in her tax return?
Please help.

Look for Code V in Box 12 to find the amount included in Box 1 as taxable income.

[Gary]

No Code V

There is no Code V in box 12.

[mactoolsix]

Code V is only used for NQ's

It looks like from your original post, there has not been a sale. The company sold the 10 shares to cover taxes upon vesting, but if she is still holding the balance of the shares there has been no sale to report.

When she sells the remaining shares, she will receive a 1099-B. At that time you will need the FMV (48.43) when vested.

The explanation of proceeds merely tells you where the proceeds from the 10 shares went.

Mike

[Gary]

Thanks

Thanks. It would be difficult to get through tax season without being able to count on you all for help and advice.

Gary

[Burke]

Code V is only used for NQ's.
Mike

Interesting. I just did one that had SAR's, lapsed Restricted Shares, and a "Performance Payment" based on share value units (no actual shares issued), and all three were in the Code V amt on the W-2.

[Gary2]

Interesting. I just did one that had SAR's, lapsed Restricted Shares, and a "Performance Payment" based on share value units (no actual shares issued), and all three were in the Code V amt on the W-2.

Aren't SARs the same as the "performance payment"?

In any event, the instructions clearly say that code V is for non-qualified options. It's not clear why the IRS would care, or why they even want the number in the first place.

[mactoolsix]

From W2 instructions:
Code V—Income from the exercise of nonstatutory stock option(s).

Show the spread (that is, the fair market value of stock over the exercise price of option(s) granted to your employee with respect to that stock) from your employee's (or former employee's) exercise of nonstatutory stock option(s). Include this amount in boxes 1, 3 (up to the social security wage base), and 5.



Restricted stock is stock that has been granted to an executive that is nontransferable and subject to forfeiture under certain conditions, such as termination of employment or failure to meet either corporate or personal performance benchmarks.

RSUs resemble restricted stock options. RSUs represent an unsecured promise by the employer to grant a set number of shares of stock to the employee upon the completion of the vesting schedule. Therefore, the shares of stock cannot be delivered until vesting and forfeiture requirements have been satisfied and release is granted. Unlike standard restricted stockholders, RSU participants have no voting rights on the stock during the vesting period, because no stock has actually been issued.

However, I believe neither are required to be reported on the W2. I've seen lots of RSU's not shown on a W2 - seems to depended on the employer.

A SAR is a stock appreciation right which is a "bonus" granting an employee the right to receive an award based on the value of the company's stock. A SAR may be granted in the form of cash or stock based on the increased value over a specific time, thus SARS are a cash bonus.


Mike

[Gary2]

However, I believe neither are required to be reported on the W2.

To be thoroughly pedantic about it, these (NQSOs, RSUs, RSAs, etc.) all required to be included in boxes 1, 3, and 5. It's only the NQSO that are required to be reported separately in box 12 (even though included in the other boxes), while ISOs are on Form 3921 and ESPPs on 3922. Ordinary income from ESPPs and ISOs will often be in box 1, but not always, and will never be in boxes 3 or 5.

[Burke]

A SAR may be granted in the form of cash or stock based on the increased value over a specific time, thus SARS are a cash bonus. Mike

In this case, stock was issued and then sold in a cashless transaction. I had brokerage statements for beaucoups of shares.