re: RSU strategies

quote:

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Correct me if I'm wrong, but say you have 500 of RSUs. Once they vest you would only get 350 of those (they have taxed the other).

If I hold and in the next month the stock doubles, and I sell it's a STG. If I hold and sell after the year and gains at the time of vesting would be LTCG.

I understand you take a haircut on the RSU right off the bat. I am talking about if you choose to hold, hold for a year.

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Assuming they are stock settled.

Stock is worth $10 at time of vest. 500 shares = $5,000 of income. You are taxed on that $5,000 right there, as compensation income.

Generally, some are immediately sold to cover the tax impact on the $5,000. You get the remaining shares. Let's assume you sold 150. You have no gain or loss on these 150 because it was sold one second after it vested.

Now you have 350 shares with a cost basis of $10 each, and your holding period clock starts now.

In 7 months, you sell them at $12 each. You have Short Term Cap Gain of $2.

But instead, you sell them in 15 months at $13 each. You have long term cap gain of $3.

Why do I say "assuming they are stock settled"? Because some RSUs are cash settled. If they are cash settled, on vesting date, you get $5,000 of cash compensation, they do withholding, and send you the rest. No different than a cash bonus, really, but it's just tied to the value of stock at time of vesting.