Lion EA Posted March 30, 2018 Report Share Posted March 30, 2018 Xerox Performance Stock Shares. Awarded 2014 and released 2017. Taxable compensation ~$7,000. Not sold; however, quantity withheld to pay taxes ~$2,500. Does any of this get added for AMT? No 1099-B, but does any of this get reported on Schedule D? Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 30, 2018 Report Share Posted March 30, 2018 I just finished a return with RSUs given as performance awards, and this sounds identical to what I was working with, or an NQSO that are also reported with code V. It was coded "V", right? These have a vesting requirement that must be met, and they are "released" at 100% vesting. At that point, the FMV of all shares released is added as compensation, with some of the shares are held back to cover the tax withholding, and employee gets the balance of the shares. The shares aren't sold at that point, so there shouldn't be any reporting on Sch D. There isn't an AMT adjustment like for ISOs, but the additional amounts can throw a taxpayer into AMT if the award is large enough. I'm pretty sure you aren't talking about ISOs because tax isn't charged on those until they are sold. With RSUs and nonqualified stock options, the taxes are withheld at vesting when they add to compensation, just exactly as you described. My client's this year was only $28K and has been over $100K some years, and that make me nervous because he doesn't understand and I worry that he might not give me all the documents. This year he DID sell some, doesn't understand how all of this works, and so I had a heck of a time getting what I needed. He also insisted that he only received company shares in one way and from this one source. It turns out his one source was his Employee Stock Ownership Plan that he buys shares through a pre-tax payroll deduction and that his company matches. Guess what, he sold some of those too! I kept telling him he had two different ways that he was receiving company shares, and he kept saying 'no'. An hour or so later, he figured it out...sort of. At least he now knows two sources of shares. Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 30, 2018 Author Report Share Posted March 30, 2018 I think what you had is what I have. No code V, though. (C, D, W, DD, as usual for this client) They appear to be in her W-2 Box 1, I'm guessing due to the fact that Xerox calculated tax on her FMV and withheld enough shares to withhold that tax. So, she's already being taxed as ordinary compensation., No other adjustments need to make re either AMT nor Schedule D, right? Thank you, Judy. Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 30, 2018 Author Report Share Posted March 30, 2018 I think what you had is what I have. No code V, though. (C, D, W, DD, as usual for this client) They appear to be in her W-2 Box 1, I'm guessing due to the fact that Xerox calculated tax on her FMV and withheld enough shares to withhold that tax. The shares withheld, they do NOT count as sold? Yes, not vested until 2017 from a 2014 award date. Released shares at Vesting, and withheld enough for taxes. Plus a few dollars more -- anything to be done with her Residual Balance? Two groups vested last year, but less than $15,000. So, she's already being taxed as ordinary compensation. No other adjustments need to make re either AMT nor Schedule D, right? Thank you, Judy. I have a couple clients with RSUs, but the Xerox reporting seems to be more cumbersome to wade through. [Sorry, Chrome stopped responding while I was trying to edit, so two replies.] Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 30, 2018 Author Report Share Posted March 30, 2018 ...2014 award date... Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 30, 2018 Report Share Posted March 30, 2018 The employee gets the shares when released to them at full vesting, but they don't have to sell and can continue to hold them. In my client's case, award was 2013, fully vested in 2016 and shares released to him, and then he sold in 2017. He finally understands that if he continues to hold the shares beyond vesting, that he will have a gain or loss on Sch D because of changes in share price from the vesting date to date of sale. If your client didn't get a 1099-B, then you have nothing to report other than to enter the W-2 with the value of the released shares added in to his comp as ordinary income. Keep in mind that the vesting date is used to determine whether it's short or long, because the vesting is when he actually get the shares and has control over them. If they choose to sell at the same time as vesting as we sometimes see with NQ stock options, then you have basis equal to the comp added to the W-2 that ends up with a small cap loss because of the selling expenses incurred. This is a pretty good summary of how these work, when/how a sale might occur, and how the taxes withheld can be paid: https://us.etrade.com/knowledge/education/stock-plan/understanding-restricted-performance-stock Quote Link to comment Share on other sites More sharing options...
Max W Posted March 30, 2018 Report Share Posted March 30, 2018 I posted something similar recently and now I am beginning to understand it. However, is the CG reported on 1099-B, offset by any basis, or is it what it is? Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 30, 2018 Report Share Posted March 30, 2018 The basis is the compensation that was added to the W-2. Basically, they were paid in stock at FMV instead of in cash for their bonus. Think of it in terms similar to dividends that are reinvested - reported as "paid" with a dollar amount but the taxpayer never sees the money because it buys the shares, and it's compensation that is taxed at ordinary rates. Obviously, you would have to prorate the compensation if only sold a portion was sold. At least with RSU's they aren't added to the W-2 until they vest because there is some risk of not meeting the vesting requirement, like if they leave the employer the shares could be forefeited. Quote Link to comment Share on other sites More sharing options...
Max W Posted March 30, 2018 Report Share Posted March 30, 2018 Here is a detailed report, with examples, from Roche/Genentech that addresses all of these issues. It is 28 pages and I'm not sure it uploaded. 2017_Tax_Reporting.pdf Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 30, 2018 Author Report Share Posted March 30, 2018 That is all very helpful, Judy & Max. So many flavors of stock options! Just had a call with that client (she's in CA; I'm in CT) and think we have all locked down now. For 2018, she'll have some prorated shares due to her retirement, and be selling most to consolidate her monies. Luckily, she's in finance so knows what to save and is organized. Hope my memory doesn't fail me by next year! But, that's why all of you are my safety net. Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 30, 2018 Report Share Posted March 30, 2018 You can always print the topic and save to the client's file with your other note, make a reference to the title, save a link to it in a Word doc or similar, or bookmark it. I never remember to add things like that to my notes and I should. 1 Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 30, 2018 Author Report Share Posted March 30, 2018 Yep, I saved this thread to her computer folder while talking to her on the phone. Saving the links now, also, separately. Max: your link doesn't go anyplace. Would you please upload it or type in the link. Thank you. 2 Quote Link to comment Share on other sites More sharing options...
Abby Normal Posted March 31, 2018 Report Share Posted March 31, 2018 6 hours ago, Max W said: I'm not sure it uploaded It didn't. Quote Link to comment Share on other sites More sharing options...
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