I was granted company restricted stock with a vesting period of 4 years. I was under the impression that upon vesting, the stock is taxed and that's all I owe. I could then sell the stock and that money was mine. But I just received a CP2000 letter saying I owe short term capital gains tax as well. Is this right?
From the stock prospectus:
B. Stock Appreciation Rights Our grant of a SAR to you is generally not a taxable event for you. Upon your exercise of the SAR, you will generally recognize ordinary income equal to the amount of cash and/or the fair market value of any shares you receive. You will be subject to income tax withholding at the time when the ordinary income is recognized. If the SAR is settled in shares, your subsequent sale of the shares generally will give rise to a capital gain or loss equal to the difference between the sale price and the ordinary income recognized when you received the shares, and this capital gain will be taxable as a long-term capital gain if you held the shares for more than one year.
My 1099-B is reporting $0.00 for cost basis and I'm wondering if that is the problem. Shouldn't the capital gains tax just be on the difference between the price at sale minus the price at vesting? I'm really not good at finances, but something seems very wrong here.