Accounts · Lots of talk
RSUs / ESPP
Also called restricted stock units · employee stock purchase plan · vesting RSUs · company stock
Community talk. May contain inaccuracies. Not financial, tax, legal, or investment advice. No return or outcome is promised.
Restricted stock units (RSUs) are job awards paid in company shares or cash after conditions are met. An employee stock purchase plan (ESPP) lets eligible workers buy employer shares. Both require understanding when stock becomes usable money.
IRS equity compensation guide · 202401
Receiving awards and buying shares
RSUs start as a promise, not spendable shares. Vesting means meeting conditions, often service or performance milestones. Settlement is delivery of shares or cash; dates can differ. The grant agreement sets the schedule and employment-end rules. Blackouts and employer holds can delay sales.
Fidelity glossary · checked 29 Sept 2026ESPP purchases use money from your paycheck. Eligible employees enroll during the plan's window. After-tax payroll deductions accumulate until the purchase date, then buy shares deposited into a brokerage account. Take-home cash falls while contributions wait; contribution and withdrawal terms need checking in the plan.
Fidelity ESPP FAQ · checked 29 Sept 2026RSU delivery creates compensation income. Under ordinary U.S. federal treatment, delivered shares count as compensation at their value then, often at vesting. Cash-settled awards pay cash instead. An RSU grant cannot use an 83(b) election to pay tax earlier.
IRS equity compensation guide · 2024ESPP tax treatment depends on the plan. A U.S. Section 423 plan generally has no income tax at grant or purchase; selling can create wages and capital gain or loss. Nonqualified plans generally tax the discount at purchase. Check which type the employer offers.
Fidelity ESPP FAQ · checked 29 Sept 2026The Section 423 holding test has two dates. A qualifying sale waits until the later of one year after share transfer and two years after option grant. Part of the discount may still be taxed as wages. Form 3922 helps track these dates. Selling sooner changes tax treatment; employer sale restrictions are separate.
IRS ESPP FAQ · checked 29 Sept 2026Keep payroll and brokerage records together. Compare the W-2, award/purchase statements, sale Form 1099-B and supplemental statement. Basis is the amount used to calculate capital gain or loss after a sale. It should include compensation already counted as wages, which the broker's reported basis may omit.
Fidelity tax FAQ · checked 29 Sept 202602
What these plans can offer
A discount or lookback can lower the purchase price. Some ESPPs use the lower of the offering-start or purchase-date price. This optional lookback and any discount can improve purchase terms, without guaranteeing later sale proceeds.
Fidelity ESPP FAQ · checked 29 Sept 2026Delivered RSU shares can fund other goals. Subject to retention requirements, employees can sell shares to build cash reserves, pay debt or invest elsewhere. Holding keeps exposure to the employer's share price.
Morgan Stanley at Work · 202403
Good to know
Tax withholding may leave a balance due. Selling or withholding shares funds RSU withholding and leaves fewer shares in the account. The withholding can exceed or fall short of the final income tax bill.
Morgan Stanley at Work · 2024A falling ESPP share price can leave wages and a capital loss. A disqualifying sale can leave taxable compensation despite losing money. The purchase-date spread increases basis before calculating the separate capital loss.
IRS Publication 525 · 2025Hypothetical U.S. Section 423 ESPP: 100 shares bought for $85 each when worth $100 each, then sold for $80 each before the qualifying holding period ends. Assume no fees, wash-sale adjustment or other basis adjustment.
| Calculation | Amount |
|---|---|
| Purchase cost: 100 × $85 | $8,500 |
| Compensation: 100 × ($100 − $85) | $1,500 |
| Adjusted basis: $8,500 + $1,500 | $10,000 |
| Sale proceeds: 100 × $80 | $8,000 |
| Capital loss: $8,000 − $10,000 | −$2,000 |
Cash proceeds are $500 below the purchase cost. Tax reporting separates $1,500 of wages from a $2,000 capital loss; those categories do not necessarily offset dollar-for-dollar on the return.
Specifically a disqualifying Section 423 ESPP sale, not RSU treatment or a qualifying ESPP sale. No tax-saving amount is implied; actual reporting needs the plan and tax records.
The ESPP tax limit uses grant-date value. Section 423 purchase rights accrue at up to $25,000 of grant-date stock value per year an option is outstanding, across employer-group plans. This is not simply a payroll-contribution cap.
IRS final ESPP regulations · 2009A sale may carry transaction fees. The order estimate and trade confirmation show the account's costs. A purchase discount does not mean every later transaction is free.
Fidelity account FAQ · checked 29 Sept 2026Employer stock creates concentration risk. A large employer-stock holding ties both investment value and job income to the same company. Trouble at that company can therefore affect both. Unlisted shares may be hard to sell.
FINRA · 2022Private-company tax deferral has strict tests. Section 83(i) can defer federal income tax on eligible stock up to five years only under narrow tests, including grants for at least 80% of U.S. employees and other conditions. Payroll taxes are not deferred.
IRS IRM · checked 29 Sept 202604
From community discussion
Selling at vest competes with wanting the upside. Accounts describe calendaring vests, planning taxes and writing sell rules before a rising price changes their mind. Others favor holding. Reported 10–20% net-worth boundaries are personal choices; continued grants depend on job and award terms.
CommunityRising shares made selling harder; losses changed minds. A poster feared missing further gains. One reply reported a roughly 90% decline over five years; another held through a 30% shortfall at retirement, then reported a 30-fold account increase from year-end 2022. These opposing experiences do not establish expected returns.
Community · RedditThe account total included shares not owned yet. A Fidelity customer wanted unvested RSUs excluded from the account total: their value fluctuated and could disappear on leaving. Fidelity acknowledged the request without a delivery date.
Community · RedditESPP discounts and vest-day tax surprises vary. Accounts cite 15%, 10% and 5% discounts, plus plans with required holds. Vest day can feel like sudden wealth before withholding reduces the shares received. People separate the sale from the later choice to spend or reinvest its cash.
CommunityA $1.5 million employer position made diversification complicated. In an Early Retirement discussion, a near-retiree reported $1.5 million of RSU/ESPP shares and about $500,000 still coming. Replies differed on selling at once, spreading sales across years or hedging. The poster said puts were barred during employment and for three to six months afterward, and only about two-thirds of vested units arrived.
Community · Early RetirementAutomatic selling depended on the employer's plan. A Fidelity customer wanted automatic sales. The representative described a plan-dependent RSU sell-all choice and manual ESPP sales. That response does not establish every current plan's options.
Community · RedditExchange-fund proposals brought lockup and trust concerns. The Early Retirement replies raised fees, a multi-year lockup and discomfort trusting an unfamiliar exchange-fund provider with a major holding. Another participant connected an RSU/ESPP sale with tax-loss harvesting. These were discussion points, not verified fund terms or a recommendation.
Community · Early RetirementReferences for this topic
Sources and context
Adjusting cost basis of RSUs from E-Trade ↗
- id
- money-wave-rsu-talk — Adjusting cost basis of RSUs from E-Trade
- role
- Community discussion
- accessed On
- 2026-09-23
- locator
- yokuyuki opening post and follow-up about 1099-B, import and supplemental basis.
- scope
- The tax software import, reported basis and supplemental stock-plan records were not initially understood as different views. Unverified comments about W-2 Box 12 Code V were excluded.
- limitations
- Selected self-reported public posts and replies, not verified outcomes, a representative sample, a prevalence estimate, or financial/legal proof. No private account material or linked financial screenshots accessed.
IRS equity-based compensation audit technique guide, section G.3 Restricted Stock Units ↗
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- money-guide-rsu-audit-guide — IRS equity-based compensation audit technique guide, section G.3 Restricted Stock Units
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- IRS
- role
- Official context
- accessed On
- 2026-09-24
- locator
- Audit Technique Guide revision date June 25, 2024, section G.3 Restricted Stock Units
- scope
- RSUs are generally untaxed at grant, taxed at vesting, are not section 83 property at grant, and cannot use an 83(b) election on the grant. Stock settlement is taxed when shares are transferred. Cash settlement is taxed when cash is paid.
- limitations
- This is examiner guidance with a 2024 revision date. It does not state a 2026 dollar limit, a brokerage cost-basis code, or whether a particular employer withholds shares for tax.
- slugs
- rsus-espp
Stocks (Options, Splits, Traders) 4 and 5 ↗
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- money-guide-espp-irs-faq — Stocks (Options, Splits, Traders) 4 and 5
- platform
- IRS
- role
- Official context
- accessed On
- 2026-09-24
- locator
- Section 423 employee stock purchase plan answers on income timing, the holding period, ordinary income, Form 3922, and Form 1099-B
- scope
- No income at grant or exercise of a section 423 option. Tax is figured at sale. The holding period is the later of one year after transfer or two years after grant. Form 3922 tracks dates and basis. A 1099-B sale is reported even when ordinary income is also due.
- limitations
- The answers do not state an employer's actual discount. They do not cover restricted stock units. The paired grant-and-exercise answer is on the stocks-options-splits-traders-4 page.
- slugs
- rsus-espp
Internal Revenue Manual 4.23.5, Employee Stock Purchase Plans ↗
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- money-guide-espp-irm-423 — Internal Revenue Manual 4.23.5, Employee Stock Purchase Plans
- platform
- IRS
- role
- Official context
- accessed On
- 2026-09-24
- locator
- Section 4.23.5.16 stock-based compensation, employee stock purchase plans and section 83(i)
- scope
- A section 423 option price can be discounted but cannot be less than the lesser of 85 percent of fair market value at grant or 85 percent at exercise. Section 83(i) can defer income up to five years only for qualified stock of certain private corporations with a broad-based plan.
- limitations
- The manual is written for employment-tax examiners. It does not list current plan discounts or say that every employer uses a 15 percent discount.
- slugs
- rsus-espp
Equity (Stock)-Based Compensation Audit Technique Guide, Publication 5992 ↗
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- money59-rsus-espp-irs-rsu — Equity (Stock)-Based Compensation Audit Technique Guide, Publication 5992
- platform
- IRS
- role
- Official context
- accessed On
- 2026-09-29
- locator
- Section G.3, page 14; sections E/F
- scope
- Award definition and ordinary settlement-income treatment; no 83(b) on RSU grant.
- limitations
- June 2024 examiner guide is not a legal pronouncement; specialized deferrals require additional analysis.
- slugs
- rsus-espp
- published Or Updated
- 2024-06-25
Stock Plan Services Glossary ↗
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- money59-rsus-espp-glossary — Stock Plan Services Glossary
- platform
- Fidelity
- role
- Service rules
- accessed On
- 2026-09-29
- locator
- RSU, vesting, sale availability date, blackout period, employee stock purchase plan
- scope
- Terms distinguishing vesting, distribution and trading access.
- limitations
- Generic provider education; not an employee's grant agreement or a universal employer policy.
- slugs
- rsus-espp
Stock Plan Services FAQs: ESPP ↗
- id
- money59-rsus-espp-espp — Stock Plan Services FAQs: ESPP
- platform
- Fidelity
- role
- Service rules
- accessed On
- 2026-09-29
- locator
- What/how, enrollment/offering/purchase dates, lookback, holding requirement, qualified versus nonqualified
- scope
- Payroll purchase process, optional lookback and plan-type distinction.
- limitations
- No universal discount, withdrawal permission, deduction cap or sale date; page publication date absent.
- slugs
- rsus-espp
Stocks (options, splits, traders) 5: reporting Section 423 sales ↗
- id
- money59-rsus-espp-irs-sale — Stocks (options, splits, traders) 5: reporting Section 423 sales
- platform
- IRS
- role
- Official context
- accessed On
- 2026-09-29
- locator
- Answer, holding periods and Form 3922
- scope
- Federal disposition classification, compensation and transfer records.
- limitations
- Only Section 423; state and cross-border tax not covered. No employer-specific holding requirement.
- slugs
- rsus-espp
Stock Plan Services FAQs: Tax Questions ↗
- id
- money59-rsus-espp-tax-basis — Stock Plan Services FAQs: Tax Questions
- platform
- Fidelity
- role
- Service rules
- accessed On
- 2026-09-29
- locator
- Cost basis and where to find it; reporting tax forms
- scope
- Supplemental equity records help reconcile wages with broker basis.
- limitations
- Provider process, not verification of a particular customer's forms; publication date absent.
- slugs
- rsus-espp
Financial Planning With Restricted Stock Units: 3 Key Questions ↗
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- money59-rsus-espp-planning — Financial Planning With Restricted Stock Units: 3 Key Questions
- platform
- Morgan Stanley at Work / myStockOptions
- role
- Professional context
- accessed On
- 2026-09-29
- locator
- Questions 1–3; CRC 3651961 (08/2024)
- scope
- Share withholding, possible income-tax shortfall and uses after permissible sale.
- limitations
- Third-party myStockOptions education hosted by financial-services provider; hypothetical rates/examples not adopted.
- slugs
- rsus-espp
Publication 525 (2025): ESPP holding period not satisfied ↗
- id
- money59-rsus-espp-irs-loss — Publication 525 (2025): ESPP holding period not satisfied
- platform
- IRS
- role
- Official context
- accessed On
- 2026-09-29
- locator
- Employee stock purchase plan: holding period requirement not satisfied, paragraph before Example 11
- scope
- Disqualifying wage spread may exceed sale gain; basis increased by compensation.
- limitations
- Opened edition is 2025, not a 2026 filing guide. Only this concise topic fact used to conserve shared-source budget.
- slugs
- rsus-espp
T.D. 9471: Final employee stock purchase plan regulations ↗
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- money59-rsus-espp-regulation — T.D. 9471: Final employee stock purchase plan regulations
- platform
- IRS / Treasury
- role
- Official context
- accessed On
- 2026-09-29
- locator
- T.D. 9471 annual $25,000 limitation and effective/applicability date
- scope
- Grant-date-value purchase-right accrual across employer-group plans; applies from January 1, 2010.
- limitations
- Final 2009 regulations, not the 2008 proposal. Detailed multi-year accrual calculation belongs to the actual plan; no inflation-adjusted future limit implied.
- slugs
- rsus-espp
Stock Plan Services FAQs: About Your Account ↗
- id
- money59-rsus-espp-account — Stock Plan Services FAQs: About Your Account
- platform
- Fidelity
- role
- Service rules
- accessed On
- 2026-09-29
- locator
- Transaction fees; award acceptance and withholding
- scope
- Review estimated and actual equity transaction fees.
- limitations
- No fee amount asserted; adjacent generic tax language is not used to override Section 423 rules.
- slugs
- rsus-espp
Concentrate on Concentration Risk ↗
- id
- money59-rsus-espp-concentration — Concentrate on Concentration Risk
- platform
- FINRA
- role
- Official context
- accessed On
- 2026-09-29
- locator
- Company stock concentration and illiquid investments
- scope
- Large employer holdings amplify single-investment risk and can be hard to sell.
- limitations
- General risk education, no universal safe employer-stock allocation.
- slugs
- rsus-espp
- published Or Updated
- 2022-06-15
IRM 4.23.5.16.2: Stock-Based Compensation ↗
- id
- money59-rsus-espp-irm — IRM 4.23.5.16.2: Stock-Based Compensation
- platform
- IRS
- role
- Official context
- accessed On
- 2026-09-29
- locator
- Items 6–11 on ESPP, disqualifying dispositions and IRC 83(i)
- scope
- Section 423 price floor and narrow private-company income deferral; employment taxes unaffected.
- limitations
- Examiner guidance; other Section 83(i) exclusions/tests matter, not merely private-company status.
- slugs
- rsus-espp
How are you handling your ESPP/RSUs when the stock is absolutely tearing it up? ↗
- id
- money59-rsus-espp-market-emotions — How are you handling your ESPP/RSUs when the stock is absolutely tearing it up?
- platform
- Reddit r/financialindependence
- role
- Community discussion
- accessed On
- 2026-09-29
- locator
- Original post; S7EFEN, gambolier, kaBUdl replies
- scope
- Conflicting individual price-history and selling experiences.
- limitations
- Unverified self-reports; extreme outlier gains are not expected results. Relative date only; no exact date inferred.
- slugs
- rsus-espp
Offer option to exclude RSUs from total account balance ↗
- id
- money59-rsus-espp-balance — Offer option to exclude RSUs from total account balance
- platform
- Reddit r/fidelityinvestments
- role
- Community discussion
- accessed On
- 2026-09-29
- locator
- ProfessorDeeps original and FidelityAsha response; Top Posts October 15, 2024
- scope
- Unvested award value distorted one customer's view of owned assets.
- limitations
- Provider response in its own commercial support forum; not a current feature-availability check.
- slugs
- rsus-espp
- published Or Updated
- 2024-10-15
Is Cache Exchange Fund trustworthy? Seeking advice on a $1.5M concentrated position ↗
- id
- money-rebuild-rsus-espp-early-retirement — Is Cache Exchange Fund trustworthy? Seeking advice on a $1.5M concentrated position
- platform
- Early Retirement
- role
- Community discussion
- published Or Updated
- 2026-06-15
- accessed On
- 2026-09-27
- locator
- Original post and replies through the short-term-gain and post-employment trading-limit exchange
- scope
- One person reported roughly $1.5 million of ESPP and RSU shares, another tranche of about $0.5 million still coming, and a choice between a large tax bill and single-company risk. Replies disagreed about selling over years, selling a large share, options hedges, and a newer exchange fund. The original poster said about two-thirds of RSU units were received and that the company barred puts during employment and for three to six months after leaving.
- limitations
- One thread, not a count of employees. Exchange-fund fees and lockups mentioned by replies were not checked against a fund document. Reddit and Bogleheads pages for this topic did not load.
- slugs
- rsus-espp
Possible to automatically sell RSUs when they vest, or ESPP? ↗
- id
- money59-rsus-espp-auto-sell — Possible to automatically sell RSUs when they vest, or ESPP?
- platform
- Reddit r/fidelityinvestments
- role
- Community discussion
- accessed On
- 2026-09-29
- locator
- Sli0 original and FidelityMcKinley response
- scope
- Automatic-selling question and provider's plan-dependent explanation.
- limitations
- Commercial provider reply; historical interface/process answer, not universal current availability.
- slugs
- rsus-espp
Keep this topic in view
Preserved original record
Earlier public profile and reader notes are preserved separately from the current article. They may contain superseded wording and are not newly checked material.
Read the full original profile
- slug
- rsus-espp
- name
- RSUs / ESPP
- aliases
- restricted stock units
- employee stock purchase plan
- vesting RSUs
- company stock
- family
- accounts
- heat
- high
- talk
- Lots of talk
- most Discussed
- false
- first Line
- Restricted stock units, or RSUs, are an employer stock award subject to vesting conditions. An employee stock purchase plan, or ESPP, lets eligible workers buy employer shares, sometimes at a discount.
- why Line
- Employees discuss keeping or selling employer shares, having both pay and investments tied to one company, and reconciling payroll income with sale and cost-basis records.
- feel Words
- RSU vest
- ESPP
- sell on vest
- company stock
- common Picture
- lead
- Vesting and selling are separate events
- why
- The award terms, payroll record and sale record each describe part of the history. [community]
- lead
- ESPP discounts depend on the plan
- why
- The familiar 15% figure in reports is an example, not a feature of every employer plan. [community]
- watch For
- Holding employer shares can tie both employment income and investments to one company. Payroll withholding and the later sale record also need to be reconciled. This is not an investment recommendation.
- what People Say
- The job: turn a grant into cash or a known concentration, on purpose. [community]
- r/personalfinance and r/fatFIRE usually chant sell-on-vest, diversify. [community]
- Hold-the-company rooms chant upside. [community]
- Not advice and not a ticker recommendation. [community]
- how People Run It
- Calendar the vest. [community]
- Plan the tax before the share hits. [community]
- If they hold, they name a percent-of-net-worth cap. [community]
- amounts People Use
- ESPP discounts are plan-specific (people chant 15% as a common story — read the plan). [community]
- Concentration caps are personal; forums throw 10–20% as a worry line, not a law. [community]
- how People Keep It
- A sell rule written on vest day, not on a green ticker. [community]
- how It Feels
- Vest day: fake rich, then tax. [community]
- how Long People Run It
- As long as the job grants. [community]
- deep Dive
- Vesting, sale and reinvestment are separate steps: shares may first appear in an employer-linked brokerage account. A sale creates cash; whether that cash is kept for a bill or invested elsewhere is another decision, with sale and cost-basis records retained. [community]
- watch For Long
- Letting one logo be paycheck plus portfolio. [community]
- related
- taxable-brokerage
- the-match
- tax-loss-harvesting
- solo-401k
- research Pointer
- house Pointers
- play Pointer
- —
- sources
- r/personalfinance RSU threads
- sell-on-vest vs hold arguments
- disclaimer
- Community talk may be wrong. Not financial, tax, legal, or investment advice. No return or outcome is promised.
- quick Answer History
- field
- commonPicture
- rows
- lead
- A vest date
- why
- Shares appear; tax appears. [community]
- lead
- ESPP discount window
- why
- Buy at a stated discount if the plan is simple. [community]
- field
- definition
- rows
- RSUs and ESPP are job stock: vesting shares, a purchase-window discount, and a decision to sell or hold the company.
- field
- communityPicture
- rows
- People calendar vest dates, set aside tax, and argue sell-on-vest versus concentration in the same logo that already pays them.
- field
- firstLine
- rows
- RSUs and ESPP are job stock — vesting, a purchase window, and the fight about whether to sell on vest or hold the company.
- field
- whyLine
- rows
- RSUs and ESPP are job stock — vesting, a purchase window, and the fight about whether to sell on vest or hold the company.
- field
- commonPicture
- rows
- lead
- RSUs: employer shares that vest on a schedule
- why
- Restricted stock units become shares under the award’s terms. [community]
- lead
- Sell-on-vest vs hold
- why
- The internet’s split. [community]
- lead
- ESPP: employee stock purchase plan
- why
- The reports commonly cite a 15% purchase discount; the actual plan sets its terms. [community]
- lead
- Single-stock risk
- why
- Paycheck already tied to the same logo. [community]
- field
- watchFor
- rows
- Concentration. Missing the tax withholding. This is not a ticker shop and not $STUD.
- field
- deepDive
- rows
- Taxable brokerage is where sold shares often land. [community]
Read the preserved reader notes
- definition
- Restricted stock units, or RSUs, are an employer stock award subject to vesting conditions. An employee stock purchase plan, or ESPP, lets eligible workers buy employer shares, sometimes at a discount.
- community Picture
- Employees discuss keeping or selling employer shares, having both pay and investments tied to one company, and reconciling payroll income with sale and cost-basis records.
- additions
- text
- A selected r/tax poster was unsure whether a new nonzero cost-basis figure in an imported stock-sale record replaced the supplemental adjustment they had used in earlier years. Their follow-up said the import now matched what they expected. The practical issue is reconciling the sale record, stock-plan supplement and payroll treatment; the discussion does not establish the correct tax treatment of every RSU or ESPP sale.
- sources
- guide
- what
- A restricted stock unit is an unsecured promise to deliver stock or cash later. The IRS equity-compensation audit technique guide, revised June 25, 2024, says the units generally are not taxed at grant when the deferred-compensation rules are met, and that tax generally waits until vesting. No shares have been transferred at grant, so a section 83(b) election cannot be filed on the grant. Stock-settled units are taxed when the shares are actually delivered. Cash-settled units are taxed when the cash is paid.
- That is not an employee stock purchase plan. A section 423 plan is a statutory option. IRS Frequently Asked Questions say nothing is included in income at grant or at exercise. Tax shows up at the sale, as wages, as capital gain or loss, or as both. The IRS Internal Revenue Manual says a section 423 option price cannot be less than the lesser of 85 percent of fair market value at grant or 85 percent at exercise. That is a floor on the price, not a discount every employer offers.
- Vesting and selling are separate. Delivery creates wage income. A later sale creates gain or loss measured from a basis that has to include the amount already taxed. Restricted stock, which is actual shares that can be forfeited, can be a different case under Publication 525, including an election to include the value in the year of transfer. An RSU grant is not that transfer.
- how
- Read the grant before the vest date. Note whether it pays in stock or cash, the vest date, and any trading window. On vest day, read the pay stub and the brokerage deposit together. The wage amount and the number of shares that arrive can differ when the plan holds shares back for taxes. The audit guide's point is the value of the stock actually transferred.
- If shares remain, the next act is a separate sale or a decision to keep them. Line up three records: Form W-2 box 1, the vest confirmation, and, after a sale, Form 1099-B. Publication 525 says that for nonstatutory options granted on or after January 1, 2014, the basis on Form 1099-B does not include compensation already taxed, so the basis has to be adjusted. Check an RSU sale the same way: the basis used on the sale should include the amount already included in wages. The confirmation shows whether a share was withheld or sold to cover tax.
- For a section 423 purchase, enroll in the plan window and let the payroll deductions run to the purchase date. Keep Form 3922. The IRS FAQ says the special holding period is met only if the stock is not sold until the later of one year after the shares were transferred or two years after the option was granted. If that period is met and the purchase price was below value at grant, but not below the 85 percent floor, ordinary income is the lesser of the discount at grant or the gain at sale. The rest is capital gain. If the period is missed, ordinary income is the value at purchase minus the price, and any further difference is capital gain or loss.
- Report the 1099-B sale on Form 8949 and Schedule D. If the W-2 omits the ordinary income, the FAQ says to put it on Schedule 1, line 8k. A normal pass is one vest or one purchase window: save the plan statement, match it to the W-2, and write down whether the shares were sold or kept. The plan document sets the real discount and any lookback. Section 83(i), a deferral of up to five years, is a narrow private-company election on the IRS pages, not the ordinary public-company vest.
- understand
- Wage tax falls at delivery because the shares or cash are pay for work. Capital gain or loss appears only if those shares are later sold for a different amount. Keeping the shares leaves both the paycheck and the investment tied to one employer. No IRS page opened here sets a percent of net worth as a cap on employer stock. Personal caps show up in the community notes, not in the Code sections these pages describe.
- The familiar 15 percent discount is the gap between fair market value and the 85 percent price floor in the Internal Revenue Manual for a section 423 plan. A plan can set a higher price, which is a smaller discount. A plan that is not under section 423 is outside that sentence. Form 3922 is what the IRS says to use for dates and basis on a qualifying purchase. The plan, the W-2, and the 1099-B still have to be read together.
- Filing an 83(b) election on an RSU grant is the wrong form, because the audit guide says no property was transferred. Treating a section 83(i) deferral as available at a public company is also the wrong tool. The manual limits that election to qualified employees of corporations whose stock was not readily tradable, with a written plan for at least 80 percent of U.S. employees, and it does not postpone Social Security and Medicare tax. The award, Form 3922 when it exists, and the sale confirmation remain the records.
- sources
- summary Sources
- note References
- field
- deepDive
- index
- 0
- text
- Vesting, sale and reinvestment are separate steps: shares may first appear in an employer-linked brokerage account. A sale creates cash; whether that cash is kept for a bill or invested elsewhere is another decision, with sale and cost-basis records retained. [community]
- sources
End of RSUs / ESPP