1

I've read through a bunch of posts and couldn't find a definitive answer. In this example, I have RSUs that vest every month from my employer. Let's say I decide to sell 1 share of stock for a capital loss of $50.

In a more straightforward case, I would normally be able to take this -$50 loss and offset it against other capital gains I may have. However since I have RSUs vesting every month, this violates the wash sale rule because it's as if I bought more shares of an identical stock once my new shares vest.

What I'm unclear about, is whether or not I can adjust the cost bases of 1 of the newly vested shares, since the loss was not eligible to be deducted in this tax year.

On page 56 of IRS Pub 550:

If your loss was disallowed because of the wash sale rules, add the disallowed loss to the cost of the new stock or securities (except in (4) above). The result is your basis in the new stock or securities. This adjustment postpones the loss deduction until the disposition of the new stock or securities. Your holding period for the new stock or securities includes the holding period of the stock or securities sold.

The only exception mentioned here (4), refers to buying an identical security in a IRA account which is not my situation. So, to me, it seems like I could make the adjustment to postpone the loss deduction on one of my newly vested shares.

However, later in the section they give this example, which does not explicitly mention adjusting the cost basis:

Example 2. You are an employee of a corporation with an incentive pay plan. Under this plan, you are given 10 shares of the corporation's stock as a bonus award. You include the fair market value of the stock in your gross income as additional pay. You later sell these shares at a loss. If you receive another bonus award of substantially identical stock within 30 days of the sale, you cannot deduct your loss on the sale.

This concerns me as an earlier example (Example 1) explicitly mentioned adjusting the cost basis in the example:

Example 1. You buy 100 shares of X stock for $1,000. You sell these shares for $750 and within 30 days from the sale you buy 100 shares of the same stock for $800. Because you bought substantially identical stock, you cannot deduct your loss of $250 on the sale. However, you add the disallowed loss of $250 to the cost of the new stock, $800, to obtain your basis in the new stock, which is $1,050.

Since this language is not explicitly used in Example 2, does this imply that RSU vesting is another exception to the rule for adjusting the cost basis?

Does anyone have clarification on how to handle this situation?

  • Example 2 says you can't deduct the loss not that you can't adjust the buy price on the newly acquired lot. – quid Jul 10 at 5:49
  • Is it safe, then, to assume that it can still be used to adjust the price basis in Example 2? It's not called out explicitly one way or the other. – MrHappyAsthma Jul 11 at 6:24
  • 1
    Did you make an 83(b) election with respect to these RSUs? Are you sure they're structured so that they become yours when they vest (as opposed to already being used and just becoming no longer subject to forfeiture when they vest)? RSUs can be set up either way. – David Schwartz Jul 12 at 1:35
  • I did not make an 83(b) election. When the RSUs vests, I pay income tax at that point via withholding of partial shares. – MrHappyAsthma Jul 12 at 6:46

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.