[bn-usd-mistake]

Any source for not being liable for income taxes at the time of receiving stocks? That seems like a very obvious gap (which is not present in many EU countries at least, here we are definitely liable for income tax when RSUs vest).

I thought the reason for delaying selling of stocks is to avoid capital gains tax, not income tax.

I did a quick google, and most sources seem to support that taxes are due at RSU vesting time, e.g.

> With RSUs, you are taxed when the shares are delivered, which is almost always at vesting. Your taxable income is the market value of the shares at vesting.

https://www.schwab.com/public/eac/resources/articles/rsu_fac...

Why would this be different for the salaries of rich people? Isn't it more that they usually get large amounts of stocks at low prices if they stick with the company for a long time?

[nordsieck]

> Any source for not being liable for income taxes at the time of receiving stocks?

Depends on the details.

For founders and early employees, the 83(b) election[1] can make a huge difference. Basically, you have the option to pay taxes on the value of the stock portion of your compensation at the time of granting, rather than when it vests. For an early stage company, that's basically $0.

I'm not 100% clear on the details, so if you're interested that's 1 good place to look.

---

1. https://www.investopedia.com/terms/1/83b-election.asp

[Hendrikto]

There are different types of stock options.

> ISO – no tax liability for exercising the option. You pay capital gains tax when you sell your contract or sell the stocks in your option.

> As you can see, there are tax benefits to going with the ISO – you don’t pay any ordinary income tax at any point.

ISO = Incentive Stock Option

https://www.vectorvest.com/blog/options/how-are-stock-option...

[filoleg]

Makes sense with ISOs. Until you sell the contract or the shares from exercising the options, you don't have any actual money, and those options or shares can go to zero tomorrow (let's say extremely unlikely to happen, but that's not relevant to the point). So there isn't really any actual money to take from you until then.

The second you convert it to actual money by selling, you get hit with taxes (or Nintendo standing behind your shoulder), and you pay off your responsibilities using a chunk of money you've just received.

[singleshot_]

If you received the stocks from someone who died and devised them to you, your basis will be the fair market value at the time of death and you will not owe taxes.

(They might have if they were over the $12.02m lifetime gift limit but they probably weren’t if they had $12.02m to give away).