Restricted Stock Units

stewak2 · Post by **stewak2** » Fri Nov 17, 2006 2:00 pm

Dual USC/Canadian citizen.
Canadian resident commuting to work in USA.
Awarded Restricted Stock Units - tax implications.
RSU = units of company stock that vest in future. I.E., in 2 years I get 'x' units and 2 years later 'x' more units, at whatever the price is at the time.
I assume I would just treat this as employement income in the years the stock is actually received ('x' units at current price)?
Any CCRA or IRS implications?
No tax due until actually awarded? - obviously if I leave the company or die before vesting they are not awarded.
Thanks in advance.

nelsona · Post by **nelsona** » Fri Nov 17, 2006 2:25 pm

CRA and IRS do not have the same rules for options.

Genarally, in canada you MUST declare the option as income in the year you exercise it.

In US, you have a choice to make, particularly with restricted stock. You may wish to base your choice on meshing tax credits, particularly the US tax you can use on your cdn return.

stewak2 · Post by **stewak2** » Fri Nov 17, 2006 2:46 pm

Year excercised = year vested? Or year awarded?
These are not options - basically awards of fixed number of units at some time in future ( when vested).

Assuming so, I pay CCRA & IRS based on market value at that time, and then later when stock is actually sold, I have a gain/loss based on the market value at time vested?
i.e vest at $50, x*50 = employment income in year of vesting,
sell 2 years later at $60, capital gain of x*10?

stewak2 · Post by **stewak2** » Fri Nov 17, 2006 2:47 pm

I guess I should be clear, what I fear is paying tax in year of award, but then leaving company employment before vesting and never actually receiving the stock.

nelsona · Post by **nelsona** » Fri Nov 17, 2006 3:12 pm

Generally in US, if you elect to include the income in the year it is awarded, and then 'lose' the stock, it becomes a capital loss in that year.