RSU Cost Basis and Capital Gains: How to Report Vesting and Sales
RSUs trigger two different tax events, and mixing them up is a common mistake that leads to overpaying or underpaying taxes. This guide keeps it simple.
The Two Tax Events You Must Track
- Vesting creates ordinary income. The fair market value on vest day is added to your W-2.
- Selling creates capital gains or losses. The difference between your sale price and the vest-day price is your gain or loss.
To estimate your total liability at vesting, start with the RSU Tax Calculator.
What Your Cost Basis Really Is
Your cost basis for RSUs is the fair market value at vesting. This is the number you compare against the sale price to calculate capital gains.
If your broker shows a lower basis or marks it as "unknown," you may be at risk of double taxation. Keep your vesting confirmations and compare them against the 1099-B you receive.
Capital Gains: Short-Term vs Long-Term
The holding period starts at vesting. Sell within a year and it is short-term. Hold longer and it is long-term. The difference can be meaningful, but only if the stock rises after vesting.
If you want a full plan for what to sell and when, read RSU Vesting and Sale Planning.
Avoid These Common Reporting Errors
- Counting RSU income twice. The vesting value is already in your W-2.
- Using the wrong cost basis. Your basis is the vest-day price, not the grant price.
- Ignoring wash sales. Selling at a loss and receiving new RSUs within 30 days can disallow the loss.
Check wash sales with the Wash Sale Calculator.
If You Are Harvesting Losses
RSU losses can offset gains, but wash sale rules still apply. Use the Tax Loss Harvesting Calculator and keep a clean 30-day window around vesting.
Related Tools and Guides
- RSU Tax Calculator for vesting tax estimates
- RSU Tax Withholding: Why 22% Isn't Enough
- RSU Vesting and Sale Planning
- Portfolio Simulator for multi-brokerage lot tracking
If you track vesting value and sale price correctly, RSU reporting becomes straightforward. The key is keeping your basis consistent from vest day to sale day.