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Is there any tax difference between the following scenarios, and if so, what are the differences?

  • Receiving $X worth of RSUs at time A and selling them for $Y at time B

  • Receiving $X of cash income at time A, immediately using it to buy $X of common stock, then selling all of that stock for $Y at time B

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Absolutely no difference, conceptually.

In practice, when RSUs are being vested, some are usually immediately sold to cover tax withholding. So you'll receive X-wittholding worth of RSUs. Same goes for cash bonuses, so if you buy X worth shares - you're actually paying some of the taxes from "other" money.

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  • +1 thanks! So do I understand correctly that the implication of this is that, if you wouldn't have bothered purchasing said stocks with cash, then (aside from trading window and such restrictions) there's no particular financial reason to avoid selling RSUs upon receipt, right?
    – user541686
    Nov 23, 2022 at 1:27
  • @user541686 yes.
    – littleadv
    Nov 23, 2022 at 5:47

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