[alexanderscott]

Agree with other comments to sell immediately upon vesting. Learned this the hard way a while back when I held onto my vested RSUs for 1y to reduce the tax burden. Per-share value dropped below the tax % difference, and I was not diversified enough for risk.

As I also recall, holding them complicated my taxes that year and put me into AMT threshold. This may have been from option exercise though, I can’t remember.

[deanmoriarty]

> to reduce the tax burden

If you were allowed to sell on the vesting day (open trading window etc) there is generally no way to reduce any tax burden, you are taxed as regular income on the vesting day based on the vesting price, no amount of waiting will reduce your tax liability.

[TedDoesntTalk]

That’s not true if you’re getting the RSU at a discounted stare price. Waiting changes it from income tax to capital gains tax.

[deanmoriarty]

I do not follow and would love a link for my education.

Nearly all the RSU cases I’ve always seen are super simple: on date X, a given amount of shares will be given to you via vesting. You take whatever those shares are worth on that day, and pay regular tax. If you decide to hold past the vesting day, you’ll be subject to additional tax liability if the share price increases, but this additional liability will be $0 if you sell on vest day. It’s completely equivalent to getting just a variable W2 income.

In this simple framework, I’m confused as to what “discounted share price” even means. Certainly for all FAANG and big public companies it works like this.

[TedDoesntTalk]

I think I’m confusing RSUs and ESPP shares. The latter I’ve gotten discounted by 15% of the market price. If I sell them immediately, the 15% gain is taxable as income tax. If I hold them for a time (a year?), then sell, tax on gains are paid as cap gains not income tax. Of course the gain/loss at that time is anyone’s guess.

Sorry for the confusion.

[idunno246]

yea, this tracks for mixing up rsu/espp. youre close enough, but espp are super confusing. the 15% discount is always income tax, even if you sell them years later. most plans do a 'lower of price between now and the beginning of the offering period.' this is called the bargain element, and that's the part that has tax advantages(qualified disposition) for holding 2 years from the start of the offering period(so usually another 18 months since most offering periods are 6 months)