schwab

ESPP

A ESPP invest period is often 6 months, each month an amount is invested.

When the company buys the shares for you, you do not owe any taxes. You are exercising your rights under the ESPP. You have bought some stock. So far so good.

When you sell the stock, the discount that you received when you bought the stock is generally considered additional compensation to you, so you have to pay taxes on it as regular income.

If you hold the stock for less than a year before you sell it, any gains will be considered compensation and taxed as such. If you hold the shares for more than one year, any profit will be taxed at the usually lower capital gains rate.

For me, espp shares are often sold Feb or Aug after the 15th day.

Stock options

http://eac.schwab.com -> Accounts -> History -> Equity Awards website -> My Equity Awards -> History and Statements -> Date Range = All:

sell 205 ESPP shares

• Subscription: Date = 08/15/2017; FMV = $36.81
• Purchase: Date = 02/14/2014; FMV = 48.38; Price = MIN(Subscription FMV,Purchase FMV) * 0.85 = 31.2885
• Sale: Date = 02/20/2018; Price = $48.95
• capital gain = (48.38 - 31.2885) * 205 = 3503.76 USD = 3503.76 * 1.2562 cad = 4401.42 cad
• Taxes are deducted by two pay rolls's ESP-ER(02/28/2018 and 03/15/2018), each time with gain 2200.71
• My personal fed-tax rate is 26%, my personal prov-tax rate is 14.7%: 2200.71 * 0.407 = 895.69.
• As Sale Price, 48.95, is not equal with 48.38, so should further report tax gain when file tax.

sell 196 OPTIONs

• Award Names : 00002066 00003118
• Shares: 26 170
• Award Price: $3.735 $8.43
• Sale Price: $24.191
• Sale Date: 07/23/2014
• Award Date: 01/28/2009; 02/10/2010
• Exercise Cost = 3.735 * 26 + 8.43 * 170 = 97.11 + 1433.1 = 1530.21
• Taxes: 894.34
• Gross Proceeds: 196 * 24.191 - possible commissions and fees = 4741.436 - 9.046 = 4,732.39
• assume capital gain = 4,732.39 - 1530.21 = 3202.18, taxable gains = 3202.18 * 1/2 = 1601.09
• //taxable gains is 50% if span years.
• then tax rate = 894.34 / 1601.09 = 55.9%
• Net Proceeds = 2,307.84 = Gross Proceeds - Taxes - Exercise Cost = 4,732.39 - 1530.21 - 894.34

RSU

An example of an RSU grant is the easiest way to understand the concept. Let's say Sue works for ABC Corp and was awarded 300 RSUs on May 1, 2011.

50 award will vest every 6 months. Sue's first batch of 50 units of restricted stock vested on November 1, 2011. ABC was trading at $10 and Sue's employer sold 23 shares(46%) and remitted the withholding tax to CRA. Sue's second batch of 50 units of restricted stock vested on May 1, 2012. ABC was trading at $12 and Sue's employer again sold 23 shares and remitted the withholding tax to CRA. In both cases, her employer included $500 and $600 in employment income and $230 and $276 in income tax deducted in Sue's T4 for 2011 and 2012 respectively(so sue pay income tax for $270 and $324, for year 2011 and 2012).

On May 15, 2012, ABC hit $15 and Sue sold the 54 shares of ABC Corp that she holds. Sue's adjusted cost base is $11 (27 shares acquired at $10 and 27 shares acquired at $12). Since she sold for $15, her capital gains are $216, which she would declare when filing her 2012 tax return in Schedule 3, if no deduction from paychecks | payrolls.

RSU is too complex for tax, later never consider RSU.