What you owe when you sell
When your RSUs vest, the value of the shares is taxed as wages, and that value becomes your cost basis. When you sell, you’re only taxed on how much the price has changed since then.
A hypothetical example. 100 shares vest at $100 each, so you have $10,000 of wage income and a basis of $100 per share in every case.
| If you… | Sale proceeds | Gain or loss |
|---|---|---|
| Sell immediately at $100 | $10,000 | $0 gain or loss |
| Sell later at $115 | $11,500 | $1,500 capital gain |
| Sell later at $85 | $8,500 | $1,500 capital loss |
- Sale proceeds
- $10,000
- Gain or loss
- $0 gain or loss
- Sale proceeds
- $11,500
- Gain or loss
- $1,500 capital gain
- Sale proceeds
- $8,500
- Gain or loss
- $1,500 capital loss
For simplicity this assumes you have all 100 shares to sell. In practice some are withheld for taxes when they vest.
In the last row, the $1,500 loss doesn’t cancel out any of the $10,000 of wages you were taxed on. It’s a capital loss, which has its own rules.
Does holding for a year reduce the tax?
Only on the gain after the vest. If you hold the shares for more than a year, any gain is taxed at the lower long-term rate, but the tax on the vest itself doesn’t change. In the $115 example, waiting a year would lower the tax on the $1,500 gain and do nothing for the $10,000. You’d also be holding the stock for a year to get that, so weigh the two.
Why your 1099-B can show the wrong cost basis
Brokers aren’t allowed to include the income you were taxed on at vesting in the cost basis they report for RSU shares. So the 1099-B often shows a basis that’s too low, or zero.
If you file with that number, you pay tax on the same income twice. Take the $115 sale above. Your real gain is $1,500. If the 1099-B shows a basis of zero and you don’t correct it, your return reports a gain of $11,500, and you’re taxed again on the $10,000 that was already in your wages.
How to fix it
You need four documents, and the correction itself goes on Form 8949.
Award statement
This shows the share count, the price on the vest date, the shares withheld, and the shares delivered for each vest. Save one for every vest.
Paystub and W-2
The value of each vest is already included in your wages here, along with the taxes withheld.
1099-B and stock-plan supplement
The 1099-B shows your sale proceeds and the basis your broker reported. The supplement, which your broker sends alongside it, shows how much to add to that basis for the income you were already taxed on.
Form 8949
Report the sale with the basis from the 1099-B, then enter code B in column (f) and the adjustment in column (g), so the gain works out from your real basis.
If you use tax software or a preparer
Tax software usually imports the 1099-B as it is, so you have to enter the adjustment yourself. If someone prepares your return, give them the supplement along with the 1099-B and mention that the shares came from RSUs.
How this works at your company
The rules above are the same wherever you work. These guides cover what’s specific to each company.
Meet your financial advisor
Simple Money Advisors LLC is a California state-registered investment adviser.
Vaibhav Goel
Co-founder of Simple Money · Registered financial advisor · SEC record
Investment adviser representative, registered with the State of California.
Vaibhav spent fifteen years building products at Google, DoorDash and Microsoft before becoming a licensed advisor. He works with people in tech on the whole picture, equity, taxes, investments and cash flow, as one plan rather than four.
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