Question

RSA grant with 83(b) then repurchased by company, capital loss?

Forum|Forum|4 years ago
March 28, 2022
1 reply
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I previously received a RSA stock grant from my employer and filed a timely 83(b) to accelerate the taxation of that grant into the granting year.

I paid $0 for the grant and recognized the $YYY fair-market value in that year as regular income.

Unfortunatly, I left that company before the grant was fully vested. 25% was vested and I still own that, however the remaining 75% was repurchased by the company for $0 when I left.

How do I report the remaining 75%? This seems like a capitial loss since the basis at FMV was declared due to the 83(b) when granted then the company purchased it from me for $0.

In summary, that 75% was:
* I paid $0 out of pocket
* It had a fair-market value of $XXX due to 83(b) at time of grant
* That $XXX was included in regular income and becomes the basis for any future sale
* It was then repurchased by the company for $0
* Capital Loss: basis = $XXX, proceeds = $0, gain = $-XXX

Can this repurchased unvested portion be counted as a capital loss?

Because no 1099-B was involved, do I need to provide any supporting information? I could see how this would look unusual.

G

GeorgeM777

Probably, although it is a little unclear when you stated that the repurchased shares were the "unvested portion" of the RSA granted to you. However, given that you included the fair market value of the grant in your compensation, then using the fair market value as your basis seems reasonable. When you say that you paid "$0 out of pocket," it does appear that the grant was not really cost-free to you because the amount was included in your compensation and thus was subject to tax, and in regard to the tax issue, you appear to have timely made an 83(b) election. Thus, given that the FMV of the stock was included in your compensation at the time the grant was given to you, it appears reasonable to use the FMV when determining the extent of your capital loss.

It is recommended that you keep every record/document that supports your calculations. For example, keep a record of your paystubs, and other compensation records, for the period when the grant was included in your compensation, and further keep whatever records you have regarding your 83(b) election. You might also want to maintain whatever documents you can find from the company that describe their forms of compensation especially with regard to stock grants of the type you received.

@dave4447

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