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My wife receives some stock awards at her company each year. Well, actually she gets a grant of stock units and they vest 20% each year. You pay tax on these as ordinary income when they vest...this is the only way it works.
As an example, say you had 10 shares of company stock that vested at $10 a share. You pay ordinary income tax on $100 (I think they did this by actually giving you 13 shares or so but selling 3 immediately at the vesting to cover taxes). So, yay!...except now the stock is trading at $5 a share. You have $50 in stock that you paid $100 in ordinary income taxes on.
We have this situation but with greatly increased numbers. I don't like holding onto all of her companies shares until they climb back to above the vesting price (and the price she paid income taxes on) because I would rather diversify into cash, bonds, and market index funds.
Not real sure what to do, or what the tax consequences would be. If we sell some or all of the vested shares we will take a capital gains loss I think (since we paid tax on the vested price and the shares are half that now), but this loss is way more than we need (I believe you can only deduct $3000 of losses toward ordinary income). Does the loss carry forward forever?
As an example, say you had 10 shares of company stock that vested at $10 a share. You pay ordinary income tax on $100 (I think they did this by actually giving you 13 shares or so but selling 3 immediately at the vesting to cover taxes). So, yay!...except now the stock is trading at $5 a share. You have $50 in stock that you paid $100 in ordinary income taxes on.
We have this situation but with greatly increased numbers. I don't like holding onto all of her companies shares until they climb back to above the vesting price (and the price she paid income taxes on) because I would rather diversify into cash, bonds, and market index funds.
Not real sure what to do, or what the tax consequences would be. If we sell some or all of the vested shares we will take a capital gains loss I think (since we paid tax on the vested price and the shares are half that now), but this loss is way more than we need (I believe you can only deduct $3000 of losses toward ordinary income). Does the loss carry forward forever?
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