Hello everyone,
I have recently become wiser and realized I'm over-exposed owning RSUs from my employer (FAANG) since late 2021. My RSU vested on a monthly schedule. My goal is to sell all or most of my stock from my taxable account and purchase index funds/ETFs. I am trying to figure out the best way to minimize taxes by choosing the right cost basis method and timeline. The purchase price for all the grants I have received is lower than today's stock market value, so I assume tax loss harvesting is not an option here.
My thoughts are:
1) Sell recently vested RSU for a small Short Term Capital Gains tax.
2) Sell RSUs that have vested up to 12 months ago to benefit from Long Term Capital Gains tax (I will have to pay CA state Tax and likely Net Investment Income tax) in a single transaction.
3) Each month, sell one lot of RSU that have vested exactly 12 months ago (basically, the RSUs that now just benefit from favorable LTCG).
4) Sell any future RSU upon vest starting now.
That means I will first sell all the RSU I received between late 2021 and January 2022 (2), as well as recently vested RSU (1). I will have one year of RSU that I will sell every month and any newly vested RSU. It will take me a full year to sell all my current RSU to benefit LTCG tax. Is this the right (or a good) approach please?
Practically, I am unsure what cost basis to use to execute this strategy. High Cost and Last In First Out (LIFO) would help me sell the stock that was recently granted. First In First Out (FIFO) would help me sell stock subject to LTCG first. I think the Tax Lot Optimizer (Charles Schwab is the broker) wouldn't help here, so I can discard it. Low Cost would not help so I can discard it. What do you recommend? Or is it simpler to pick the "Specified Lots" option and try to implement the strategy above?
Really appreciate your help in implementing and executing the right strategy to avoid taxes. Thank you!
I have recently become wiser and realized I'm over-exposed owning RSUs from my employer (FAANG) since late 2021. My RSU vested on a monthly schedule. My goal is to sell all or most of my stock from my taxable account and purchase index funds/ETFs. I am trying to figure out the best way to minimize taxes by choosing the right cost basis method and timeline. The purchase price for all the grants I have received is lower than today's stock market value, so I assume tax loss harvesting is not an option here.
My thoughts are:
1) Sell recently vested RSU for a small Short Term Capital Gains tax.
2) Sell RSUs that have vested up to 12 months ago to benefit from Long Term Capital Gains tax (I will have to pay CA state Tax and likely Net Investment Income tax) in a single transaction.
3) Each month, sell one lot of RSU that have vested exactly 12 months ago (basically, the RSUs that now just benefit from favorable LTCG).
4) Sell any future RSU upon vest starting now.
That means I will first sell all the RSU I received between late 2021 and January 2022 (2), as well as recently vested RSU (1). I will have one year of RSU that I will sell every month and any newly vested RSU. It will take me a full year to sell all my current RSU to benefit LTCG tax. Is this the right (or a good) approach please?
Practically, I am unsure what cost basis to use to execute this strategy. High Cost and Last In First Out (LIFO) would help me sell the stock that was recently granted. First In First Out (FIFO) would help me sell stock subject to LTCG first. I think the Tax Lot Optimizer (Charles Schwab is the broker) wouldn't help here, so I can discard it. Low Cost would not help so I can discard it. What do you recommend? Or is it simpler to pick the "Specified Lots" option and try to implement the strategy above?
Really appreciate your help in implementing and executing the right strategy to avoid taxes. Thank you!
Statistics: Posted by Jary316 — Mon Jan 29, 2024 6:07 pm — Replies 1 — Views 191
