Wash Sales

[Stuart O. Bronstein]

Does anyone know if vesting of Restricted Stock Units is considered a
re-purchase of stock for wash sale purposes? An employee wants to sell
some stock that has vested, and it would be sold at a loss. But within
30 days he will have RSUs that vest. Is that considered a wash sale?

Thanks.

--
Stu
http://DownToEarthLawyer.com


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[Alan]

On Saturday, February 4, 2023 at 10:09:11 AM UTC-8, Stuart O. Bronstein wrote:
> Does anyone know if vesting of Restricted Stock Units is considered a
> re-purchase of stock for wash sale purposes? An employee wants to sell
> some stock that has vested, and it would be sold at a loss. But within
> 30 days he will have RSUs that vest. Is that considered a wash sale?
>
> Thanks.
>
> --
> Stu
> http://DownToEarthLawyer.com
>

I would think so. I'm not aware of any rule that would exclude RSUs. All other acquisitions of stock under some form of equity compensation are subject to the rule.
If you do a search on wash sale rule and restricted stock units all the hits will tell tell you this.

[Stuart O. Bronstein]

Alan <temp...@vacationmail.com> wrote:
> Stuart O. Bronstein wrote:

>> Does anyone know if vesting of Restricted Stock Units is
>> considered a re-purchase of stock for wash sale purposes? An
>> employee wants to sell some stock that has vested, and it would
>> be sold at a loss. But within 30 days he will have RSUs that
>> vest. Is that considered a wash sale?
>>

> I would think so. I'm not aware of any rule that would exclude
> RSUs. All other acquisitions of stock under some form of equity
> compensation are subject to the rule. If you do a search on wash
> sale rule and restricted stock units all the hits will tell tell
> you this.

Thanks Alan. The real problem turned out to be that he has stock that
becomes vested every month. As long as that is the case, selling stock
in that same company will always come under the wash sale rule.

--
Stu
http://DownToEarthLawyer.com


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[Tom Russ]

On Monday, February 6, 2023 at 9:21:29 AM UTC-8, Stuart O. Bronstein wrote:
> Thanks Alan. The real problem turned out to be that he has stock that
> becomes vested every month. As long as that is the case, selling stock
> in that same company will always come under the wash sale rule.

Two observations:
(1) It only applies to stock sold at a loss. So if there are multiple lots to
choose from, one could perhaps find ones with only a small gain and avoid
the loss that triggers the wash sale.
(2) If this is something that the RSU owner wants to do on an on-going basis,
some of the plans allow one to immediately sell the shares on vesting. In that
case, there would be $0 gain and again no loss.

If one wants to get the benefit of the loss, then dealing with the wash sale
will be required. This presumes that a much larger number of shares are
being sold than the monthly vesting --- otherwise it doesn't make tax sense
as the loss won't be allowed. But one should then time the sale so that there
are only two vesting in the 60-day window instead of potentially 3 (like selling
on January 30th for 1st of month vesting).

[ira smilovitz]

On Monday, February 6, 2023 at 4:56:40 PM UTC-5, Tom Russ wrote:
> On Monday, February 6, 2023 at 9:21:29 AM UTC-8, Stuart O. Bronstein wrote:
> > Thanks Alan. The real problem turned out to be that he has stock that
> > becomes vested every month. As long as that is the case, selling stock
> > in that same company will always come under the wash sale rule.
> Two observations:
> (1) It only applies to stock sold at a loss. So if there are multiple lots to
> choose from, one could perhaps find ones with only a small gain and avoid
> the loss that triggers the wash sale.
> (2) If this is something that the RSU owner wants to do on an on-going basis,
> some of the plans allow one to immediately sell the shares on vesting. In that
> case, there would be $0 gain and again no loss.

That's not accurate. There is always a small gain or loss since there are either transaction costs or price fluctuations between the purchase and sale transactions.

> If one wants to get the benefit of the loss, then dealing with the wash sale
> will be required. This presumes that a much larger number of shares are
> being sold than the monthly vesting --- otherwise it doesn't make tax sense
> as the loss won't be allowed. But one should then time the sale so that there
> are only two vesting in the 60-day window instead of potentially 3 (like selling
> on January 30th for 1st of month vesting).

If there are more shares being sold than are vesting, only the number of shares vesting are "washed" in the sale transaction. The loss on the remaining shares is allowed immediately (subject to there being no other acquisitions within the wash sale window).

Ira Smilovitz, EA
Leonia, NJ