RSU sell to cover, US citizen resident in another country.

Question

So, I'm a US citizen, living in another country. Part of my work comp is in the form of RSUs. Because I'm not in the US I don't have a W-2. Every quarter, some of my vesting RSUs are sold to cover local taxes in my country of residence. My employer is a US company with a subsidiary in my country of residence. The RSUs are managed in the US by E*Trade for my NASDAQ-listed employer.

How do I report this in TTPremier? Here's an example that illustrates my confusion.

1099-B data:

date of acquisition: 02/22/2021

date of sale: 02/23/2021

sales price less commissions... : 5822.04 [total-proceeds from 1099b]

cost or other basis: 6135.36 [adjusted cost from 1099b - don't know if I picked the correct column here]

category: short term non-covered

I click through a couple of screens in TTP where I don't select any of the 'less common' options. Then I say that yes, these are RSUs. I name the employer and then I get to:

date sold (box 1c) 02/23/2021

number of shares sold: 21

Next screen, TT takes the total proceeds I gave it, and divides by the number of shares to calculate the price. Next, yes, this from a single grant lot. Then the screen about vesting information

Total Shares Vested/Released: 36

Shares Withheld(Traded) to pay Taxes: 21

Market price (calculated above as 77.74)

Price You Paid per Share: 0

Now we enter the bafflement zone. I get to the screen "Your Restricted Stock Unit Sale Results" which I guess is the outcome of TT's calculations. (thanks for your patience - I know this was a lot of screens to watch me type through!).

Proceeds less expenses 5822

Price paid 0

Compensation income 2798.64 (I think is this the total vested shares 36 X closing price 77.74)

Cost basis 1166

Long-term gain 2993

I think the "cost basis" is calculated from (total vesting shares - number sold to cover) * closing price (36-21)*77.74 but I don't understand why that is a cost-basis. It's the value of the shares no sold. And I have no idea where the "Long-term gain" number comes from.

The the less-common adjustments screen. I don't select any of these.

So, my questions. Am I doing this right so far? Should I worry that I don't understand TTP's calculations of cost basis and long term gain? When it comes to the part of the report where I enter my foreign income, and taxes paid on it, I know about salary and salary taxes. But should I also include the "long term gain" as part of salary, and the gross proceeds of the sale-to-cover as part of taxes paid?

NCPERSON1 · Answer

@Colin13 let's start with an example on how RSU's normally work

1) let's say you have 100 RSUs that vest on January 2. The market price of the shares on that date is $10. That means you have $1,000 of ordinary income and that is reported as 'wages'. . It also creates the cost basis of the shares at the same $10 per share..

2) let's say on January 3rd you sell 50 of the shares and the broker charges a commission of $25. The shares trade at $11 per share. The sales proceeds are 50 shares times $11 per share or $550. The Cost basis is the same $10 per share from 1) above times 50 shares or $500 and the commission is $25 so the short term capital gain is $550 - $500 - $25 or $25.

3) and then let's say a year later you sell the remaining 50 shares and the broker charges a commission of $25. the shares trade at $20 per share. The sales proceeds are $1,000. The cost basis is the same as before - $10 per share or $500. So the long term capital gain is $1000 - $500 - $25 or $475.

See if using that example doesn't help you with the posting of your own RSU sale.

4) what was the price of the stock on the day it vested?

5) what was the price of the stock on the next day when the 21 shares were sold?

6) if the cost basis was $77.74 on the date of the shares vested, the price the next day appears to be in the $160 range (or I am not following something)