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Posted by Rich Carreiro on March 17, 2008, 10:29 pm
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dorlockt@hotmail.com writes:
> These Restricted Stocks are a little different than normal stock
> options, I think. They were a part of my original compensation
> package at my hire date, but I also bought them outright on that date
> as well. I paid $0.001 per share on my date of hire for 1500 shares,
> of which 300 shares vest every year after my date of hire.
No, that doesn't really change anything. In fact, it makes
it even more straightforward.
Did you file a Section 83(b) election on these shares to treat
them as 100% vested for *tax* purposes, or not? Because that
matters crucially in determining the basis.
> So, I'm wondering what the exercise price might be in this case. I'm
> guessing it would be $0.30? (300 x $0.001)?
>
> I think an example might help here.
>
> W-2:
> Restricted Stock Award: $999.70
>
> Confirmation of Release:
> Award Price: $0.30 (300 x $0.001)
Ok -- that would indicate that you didn't file an 83(b) election,
because if you did, there wouldn't be wage income each year as
the stock vests. If you're ever again in a situation like this
(buying restricted stock up front for a very low price), strongly
consider making a Section 83(b) election on it.
In any event, that doesn't change that your basis is exercise price
plus wage income recognized upon vesting. The wage income is the
spread between the FMV of the stock and the exercise price on the
day the block vests.
So your basis is $999.70 + $0.30 = $1,000
> 1099-B:
> Total Gross Proceeds: $665.00
>
> So in this example would I subtract the Total Gross Proceeds price
> from the Restricted Stock Award and then add the Award Price to that
> and use that as my cost basis?
No. You add exercise price to "Restricted Stock Award" to get your
basis. In this case, your basis is $1000. Since it was sold
for $665, you have a capital *loss* of $335 on the sale.
--
Rich Carreiro rlc-news@rlcarr.com
--
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