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Date:   7 Mar 2008
From:   David

1. How do you report the sale of restricted stock units (RSUs)? Are they reported on Schedule D like other stock sales?



2. If you receive a 1099-MISC from a company for whom you performed consulting services relating to exercising a non- qualified stock option, should the income be reported on Schedule C?



3. If you didn’t sell the stock received from exercising the NQO (during 2007) until the next year (2008), how do you avoid being taxed again on the gain from the sale?

Answer

Date:   14 Mar 2008

Hello David,

1. Yes. (Ordinary income should have been reported when the restricted stock grant was received or when the shares vested. This establishes the tax basis (cost) of the shares for Schedule D.)



2. Yes.



3. The tax basis (cost) of the shares reported on Schedule D for 2008 should be the option price plus the ordinary income relating to the exercise of the option that was taxable for 2007.

Good luck!

Mike Gray

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IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this answer was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.