Restricted Stock Award

[imjulier]

Hey there-

I did a search but didn't find a string that helped me out too much here and need to know if I am on the right path.

Client received restricted stock award in 2007 that vested in 2008. On the date vested, the value of the stock was $283K. The company sold some of the shares to cover $88K in taxes. Statement and paystub says that taxable income is $283K. So, the $283K will end up as wages on his W-2, right? And, this $283K will be the basis going forward, right? The amount sold to pay taxes will be shown on schedule D with no G/L as the stock neither increased or decreased in value from the time he received the stock to the time sold for taxes (this was all done in one transaction on the same day)?

Also, I believe he still owns all the stock not used to pay taxes so he will pay a huge chunk of taxes in 2008 on ordinary income reported as wages for the stock award, and when sold, may generate a loss or gain depending on how stock value has moved. If a loss, he'll be limited to claiming $3,000 per year unless he can use it to offset other gains. Bottom line is pay big taxes in 2008 and not reap rewards until some future date. Sound right?

I appreciate any feedback....just want to make sure I "get it".

Thanks,

Julie

[TAXBILLY]

Since the company sold the stock to generate withholding there would be no 1099-B issued.

He may want to sell some of the stock by 12/31 if there is a loss to at least take advantage of the $3000.

taxbilly

[Gail in Virginia]

You might want to check the details of the stock transaction with AMT in mind also. Some stock awards trigger AMT and some don't, but even without that his income sounds high enough that AMT might be an issue.

[OldJack]

>>Sound right?

I appreciate any feedback....just want to make sure I "get it".

Thanks,

Julie<<

Right!!

[joanmcq]

Also, be sure that the 283K is included on the W-2 as wages. RSUs don't necessarily have to be on the W-2, although if stock was sold to cover taxes I'm thinking it will be. There may not be any federal w/h though; the taxes may only be SS depending on the type of award.