Restricted Stock Units

[John Simon]

I recently received RSUs from my employer, and was wondering how to add them
into Money 2006. I found a suggestion by Cal Learner to enter them as $0
Employee Stock Options.

That mostly works. However, the issue is that once they vest, I will have to
pay tax on them, and then will be entitled to dividends.

There seems to be no easy way to keep track of all that. (If someone has any
ideas, please post!)

So now that a lot of employers (including Microsoft) are making the switch
to RSUs, can Cal Learner, or some other MVP push the Money folks to add this
feature into Money 2007?


Thanks!

 

[David Arnstein]

I recently received RSUs from my employer, and was wondering how to add them
into Money 2006. I found a suggestion by Cal Learner to enter them as $0
Employee Stock Options.

That mostly works. However, the issue is that once they vest, I will have to
pay tax on them, and then will be entitled to dividends.

I tried this method, and it is a grave mistake. It screws up the cost
basis of the shares. It also screws up your tax records in MS Money,
if you care about that.

I believe that on the day your RSUs are vested (deposited to your
account) a taxable event occurs. Your employer witholds income tax
immediately. The cost basis of the vested shares is the market value
on the day of vesting. And, you should receive paperwork documenting
these numbers.

I modeled the above assumptions in MS Money as follows:

1. Do nothing until RSUs vest. Wait for documentation of vesting to
arrive in the mail. When the documentation arrives, record the
following in the MS Money brokerage account that you have set up
to track the RSU vesting:

2. Record a purchase of the RSU shares at the stated share price in
the documentation. The account now has a negative cash balance.

3. Record a cash deposit to the MS Money account. The total amount of
the deposit should bring the cash balance to zero. But the deposit
transaction should be split into positive salary and negative tax
categories. The amount of the taxes is copied from the
documentation you got from your employer.

If you do the following, I *think* that you will correctly record your
taxable salary, your tax witholding, and the cost basis of your
shares. I have to admit that I find tax computations to be confusing.
I hope that I got it right this time.

There is an additional complication. Your employer might sell a few of
your shares in order to raise money to pay the tax witholding. It is
not difficult to model this too, but you didn't mention it in your
original post, so I don't know if you care.