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How to handle Restricted Stock Units in Quicken?

Unknown
Unknown Member
edited March 2020 in Investing (Windows)
RSUs  (say I have 100) are like ESOG except they do not have an exercise price. They vest over a period of time, typically 4 years. Each year on the vesting day, when a portion vests (25), the price on that day becomes exercise price (FMV) for those 25 shares.

I am unable to enter the RSU grant without specifying the exercise price at the time of the grant.

Also, RSUs are given to the employee and there is no cost to buy them.

Appreciate any insight as to how I might be able to enter it and track them.

Comments

  • Unknown
    Unknown Member
    edited August 2016
    You're not correct that there's no cost to you when the shares become vested. You will recognize compensation income as the difference between the lot's FMV when they vest and any amount you have to pay ($0, in your case).

    Here's one way of handling this:

    1)Create an income category, initially with a $0 balance, called "RSU Compensation".

    2)Create an investment account (standard brokerage account with no FI entered) titled "RSU Stock".

    3)Create a new security for the stock, if you don't have the stock established in Quicken.

    4)When a lot vests enter a "MiscInc" transaction in the investment account, on the vesting date, entering the total dollars vested (# of share x per share FMV). Use the RSU Compensation account as the offset.. Use the security name you established in step 3).

    5)Use the "cash" created by step 4) to do a Buy transaction for the # of shares vested at a "price" of the per share value at vesting.

    Step 4 creates the compensation income you should expect to see on your W-2. Step 5 establishes each lot's holding period and the basis of that lot.

    Tom Young
  • Unknown
    Unknown Member
    edited July 2016

    You're not correct that there's no cost to you when the shares become vested. You will recognize compensation income as the difference between the lot's FMV when they vest and any amount you have to pay ($0, in your case).

    Here's one way of handling this:

    1)Create an income category, initially with a $0 balance, called "RSU Compensation".

    2)Create an investment account (standard brokerage account with no FI entered) titled "RSU Stock".

    3)Create a new security for the stock, if you don't have the stock established in Quicken.

    4)When a lot vests enter a "MiscInc" transaction in the investment account, on the vesting date, entering the total dollars vested (# of share x per share FMV). Use the RSU Compensation account as the offset.. Use the security name you established in step 3).

    5)Use the "cash" created by step 4) to do a Buy transaction for the # of shares vested at a "price" of the per share value at vesting.

    Step 4 creates the compensation income you should expect to see on your W-2. Step 5 establishes each lot's holding period and the basis of that lot.

    Tom Young

    Thanks, Tom. Appreciate the detailed answer.
  • jr7107
    jr7107 SuperUser ✭✭✭✭
    edited December 2018
    1. Buy units that mirror the common with a price of .000001 so there is negligible cash transaction.
    2. Buy unique units every year and note the vesting date of the issues.
    3. Generate income transactions (in my case dividends) based on each of the unique issues.
    4. On vesting, I have a "corporate acquisition" by the common, then sort out the tax withholding.

    Example
    Receive a grant on 1-January of 1000 RSU's for Stock ABC, vests in 4 years.
    Buy shares of a security on 1-Jan called "ABC RSU 2016" noting underlying/issue/vesting for total number of shares.
    On 1-Apr it pays 25 cent dividend. Generate a "Div" transaction on ABC RSU 2016 for $250 to add to cash balance.

    Hold all of these within a brokerage account like the RSUs, and it matches the cash balance. That's the way I'm handling our specific case. Another specific quirk might be that dividends are not paid in cash but reinvested as extra units. Purchasing additional units at the .000001 price should resolve that.
    Quicken user since 1994.
    Quicken Forum/Community Contributor since 2005.
  • Unknown
    Unknown Member
    edited July 2016
    jr7107 said:

    1. Buy units that mirror the common with a price of .000001 so there is negligible cash transaction.
    2. Buy unique units every year and note the vesting date of the issues.
    3. Generate income transactions (in my case dividends) based on each of the unique issues.
    4. On vesting, I have a "corporate acquisition" by the common, then sort out the tax withholding.

    Example
    Receive a grant on 1-January of 1000 RSU's for Stock ABC, vests in 4 years.
    Buy shares of a security on 1-Jan called "ABC RSU 2016" noting underlying/issue/vesting for total number of shares.
    On 1-Apr it pays 25 cent dividend. Generate a "Div" transaction on ABC RSU 2016 for $250 to add to cash balance.

    Hold all of these within a brokerage account like the RSUs, and it matches the cash balance. That's the way I'm handling our specific case. Another specific quirk might be that dividends are not paid in cash but reinvested as extra units. Purchasing additional units at the .000001 price should resolve that.

    Thanks to both of you (jr107 and Tom Young). I went with Tom's recommendation as I had seen his reply a day before yours (jr). Both seem logical options. Have a wonderful holiday season!
  • Unknown
    Unknown Member
    edited July 2016

    You're not correct that there's no cost to you when the shares become vested. You will recognize compensation income as the difference between the lot's FMV when they vest and any amount you have to pay ($0, in your case).

    Here's one way of handling this:

    1)Create an income category, initially with a $0 balance, called "RSU Compensation".

    2)Create an investment account (standard brokerage account with no FI entered) titled "RSU Stock".

    3)Create a new security for the stock, if you don't have the stock established in Quicken.

    4)When a lot vests enter a "MiscInc" transaction in the investment account, on the vesting date, entering the total dollars vested (# of share x per share FMV). Use the RSU Compensation account as the offset.. Use the security name you established in step 3).

    5)Use the "cash" created by step 4) to do a Buy transaction for the # of shares vested at a "price" of the per share value at vesting.

    Step 4 creates the compensation income you should expect to see on your W-2. Step 5 establishes each lot's holding period and the basis of that lot.

    Tom Young

    More follow-on questions:

    1) What does one do if shares are used to withhold taxes?
    For example: on 1/1/12 (the vest date), I get 100 shares, but let's say that 25 shares were withheld to pay taxes.  Do I only enter the total dollars vested as 75 shares X per share FMV?

    2) If I don't plan on holding after the shares are vested/released to me, do I need to bother with setting it up this way?  Seems like I'd  need to do something to reflect my cost basis, which is essentially zero, wouldn't I?
  • Unknown
    Unknown Member
    edited July 2016

    You're not correct that there's no cost to you when the shares become vested. You will recognize compensation income as the difference between the lot's FMV when they vest and any amount you have to pay ($0, in your case).

    Here's one way of handling this:

    1)Create an income category, initially with a $0 balance, called "RSU Compensation".

    2)Create an investment account (standard brokerage account with no FI entered) titled "RSU Stock".

    3)Create a new security for the stock, if you don't have the stock established in Quicken.

    4)When a lot vests enter a "MiscInc" transaction in the investment account, on the vesting date, entering the total dollars vested (# of share x per share FMV). Use the RSU Compensation account as the offset.. Use the security name you established in step 3).

    5)Use the "cash" created by step 4) to do a Buy transaction for the # of shares vested at a "price" of the per share value at vesting.

    Step 4 creates the compensation income you should expect to see on your W-2. Step 5 establishes each lot's holding period and the basis of that lot.

    Tom Young

    I've told Ravi_CA and I'm telling you, your cost basis certainly is NOT zero!  Your basis in the lot is the compensation reported on the W-2.  It's the vesting, not the sale, that creates that compensation.  

    Even if you never plan on doing anything other then a "same day sale" I'd still use this method as you WILL report the sale on your income taxes and the amount remitted to you will be minus broker's commission and fees, as short term capital loss.  

    As far as your withheld shares go, you'd still record the full 100 shares both as RSU Compensation and as "purchased stock".  That gets your compensation properly stated.  The "real sale" of the remaining 75 shares would be handled just like any other sale of stock, with a small loss.  You'd also "sell" the 25 shares (no fees involved) and then enter a MiscExp transaction (or transactions) to record the taxes paid.

    Tom Young
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