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Posted On: 11/13/2017 3:33:10 PM
Post# of 22463
This isn't about shares. It's about options and RSUs and probably phantom stock too.
Ordinary income is already reportable and taxable at the fair market value of the share when a restricted share vests (or you can make a section 83(b) election when you receive the restricted shares and pay the tax then on a hopefully lower FMV). This value reported as income becomes your cost basis in the stock and anything you make over that is taxed as a capital gain when you sell the share (assuming you satisfy the holding requirements).
This proposed change is seeking to apply a similar taxation scheme to options and RSUs which currently are not reportable as income and taxed until they are exercised.
Ordinary income is already reportable and taxable at the fair market value of the share when a restricted share vests (or you can make a section 83(b) election when you receive the restricted shares and pay the tax then on a hopefully lower FMV). This value reported as income becomes your cost basis in the stock and anything you make over that is taxed as a capital gain when you sell the share (assuming you satisfy the holding requirements).
This proposed change is seeking to apply a similar taxation scheme to options and RSUs which currently are not reportable as income and taxed until they are exercised.
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