itonewbie
Level 15
01-15-2020
01:24 PM
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@eva Glad to be of help.
The RSU worksheet you referred to is unique to PS. Since I don't use PS, I wouldn't be offer any guidance for your question on input. My focus has been on the tax technical side of things and something is not adding up still...
- He was fully taxed by "sale to cover.": I suppose you mean your client disposed of sufficient stocks to cover the tax withholdings (and transaction costs) at the time of vesting, which is common. This should have happened at the time the RSUs were vested and not the time when the shares were sold (of course, unless your client was subject to backup withholding for some reason).
- [T]he client no longer works for Amazon, so his 2017 W2 does not reflect these tax payments: This statement is not consistent with either #1 or the law. Amazon is required under §83 to report as compensation (and allowed a deduction for) FMV of the RSUs upon vesting when the shares not subject to substantial risk of forfeiture are transferred to its employees. I have never seen a major employer failing to meet this basic requirement, as they are supported by an army of in-house and external specialists and advisors who earn their keep. In the year the RSUs were vested (whether or not it was after the last year of employment probably as a result of good leaver provisions), the FMV would have been captured as compensation to be reported on the W-2 and that would be the only reason why some of the shares would have to be sold to cover the tax withholdings (and transaction costs).
- [T]he results show no related tax liability since the client was fully taxed on the sold shares, which created a basis: If the shares were vested and immediately sold, it would often result in a minor loss due to transaction costs. If your client disposed of only sufficient shares to cover the required tax withholdings (and transaction costs) at the time of vesting and sold the remaining shares at a later time, you should expect a certain amount of capital gain given how the share price has generally moved over those years.
Hope this makes sense.
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