Restricted Stock: Restricted Stock Units

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FAQs   

Does this website's content on restricted stock also apply to restricted stock units (RSUs)? 

Generally, yes, with two exceptions. First, with RSUs you cannot...

What is the difference between restricted stock and restricted stock units (RSUs)? 

The traits of restricted stock include the following...

Which do companies grant more often: restricted stock or restricted stock units (RSUs)? 

Starting with the broad grants of RSUs at Microsoft and Amazon, recent corporate practices suggest it is more likely that your company will grant you...

Why would my company grant me restricted stock units (RSUs) instead of restricted stock? 

By using RSUs, the company accomplishes the following...

How does the taxation of restricted stock and restricted stock units differ? 

Technically, different tax code sections apply, though under most grants the tax results are similar. With restricted stock you are taxed at vesting or earlier at grant if you make a timely Section 83(b) election. Most experts believe that you cannot make...

What is a lapse election, and why do I need to make it before the restricted stock or restricted stock units vest? 

The "lapse" is the end of the restriction that prevented the shares from vesting and being transferred to you. The lapse election is the method by which you choose withholding methods and what will be done with the...

W-2 diagram! What will appear on my W-2 in connection with a grant of restricted stock units? 

Restricted stock units result in ordinary income to you. This occurs when...

Schedule D diagram! When my restricted stock units vested, my company automatically withheld shares to cover the tax. Do I need to report these shares on my Schedule D? 

You should definitely report a sale for taxes at vesting if you...

Schedule D diagram! How do I report the sale of my restricted stock units (RSUs) on my federal income-tax return? 

You need to complete a Schedule D, Capital Gains and Losses, for the year of the sale of your stock and file it with your Form 1040 federal income-tax return. You do this even if you are only...

Do I get dividends with restricted stock units (RSUs)? How are they taxed? 

When a company pays dividends on outstanding shares of stock, it can choose...

When does my capital gains holding period begin for grants of restricted stock and restricted stock units (RSUs)? 

For restricted stock, it begins on the day after vesting, unless...

Can I make a Section 83(b) election for a grant of restricted stock units (RSUs)? 

Most experts say that you cannot...

Can my company convert restricted stock into restricted stock units? 

The American Jobs Creation Act of 2004 (AJCA) creates uncertainty about...

With restricted stock units, can I defer delivery of the shares at vesting? 

Delaying the delivery of RSU shares (and thus ordinary income taxes) at vesting depends on whether your company has a provision for this in its stock plan. Deferral is not...

As a director, can I elect to take part of my retainer as "deferred stock units"? 

Receiving deferred stock units, or RSUs that let you delay the delivery of shares (and thus taxes) at vesting, depends on...

I am a senior executive. When do I make my Form 4 filing for restricted stock, restricted stock units, and performance shares? 

Within two business days of the grant, you file Form 4 electronically under the SEC's Section 16 rules. At vesting, depending on the withholding method...

UPDATED! Will my company be able to take a tax deduction for the value of my restricted stock, restricted stock units, performance shares, or stock options if my compensation already exceeds $1 million? 

This depends on what triggers vesting. Section 162(m) of the tax code limits your company's deduction to $1 million unless a senior officer's compensation over this amount meets the performance-based exception. Stock grants are structured to meet this by...

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