How to track RSUs in your portfolio

Restricted stock units (RSUs) are a common form of equity compensation at tech companies and startups. Tracking them properly is more involved than tracking regular stock purchases because each vest event creates a new tax lot with its own cost basis, acquisition date, and holding period.

If you are not tracking your RSUs carefully, you risk paying more tax than you owe or missing important details at tax time.

Disclaimer: This article is for informational purposes only and does not constitute financial or tax advice. Tax rules vary by jurisdiction and change over time. Consult a qualified tax professional for advice specific to your situation.

What happens when RSUs vest

When RSUs vest, you receive actual shares of your company's stock. At that moment, two things happen:

1. The fair market value (FMV) on the vest date becomes taxable income. Your employer reports this as compensation on your payslip (and on your W-2 in the US, or as part of your income statement in Australia).
2. The FMV also becomes your cost basis. When you eventually sell those shares, your capital gain or loss is calculated from this price, not from the grant date price or $0.

This is the key point many people miss: the income tax and the capital gains tax are separate events. You are taxed on the FMV as income when shares vest, and then taxed again on any gain (or credited for any loss) above or below the FMV when you sell.

Why RSU tracking differs from regular stock purchases

With a normal stock purchase, you buy shares at one price on one date. RSUs create multiple complications:

Multiple vest lots. RSUs typically vest on a schedule (monthly, quarterly, or annually). Each vest is a separate lot with its own cost basis and acquisition date. A four-year vesting schedule could create 16 or more individual lots.

Different cost bases. If your company's share price moves between vests, each lot has a different cost basis. Selling shares from different lots produces different capital gains or losses.

Different holding periods. Shares from an early vest may qualify for long-term capital gains treatment while shares from a recent vest are still short-term. Knowing which lot you are selling matters for tax.

Sell-to-cover. Most RSU plans automatically sell a portion of shares at each vest to cover income tax withholding. This means every vest event involves both an acquisition and a partial sale.

The sell-to-cover problem

When shares vest, your employer typically withholds tax by selling some of the vested shares immediately. For example, if 100 shares vest and your tax withholding rate is 37%, the company sells 37 shares and gives you the remaining 63.

To track this correctly, you need to record two transactions for each vest:

1. Acquisition of 100 shares at the FMV on the vest date (this is your full vest)
2. Sale of 37 shares at the same price on the same date (the sell-to-cover)

If you only record the 63 shares you kept, your cost basis and tax records will be wrong. The sell-to-cover shares had a capital gain or loss of approximately zero (sold at the same price as acquired), but they still need to be reported.

Cost basis per vest lot

Because each vest creates a separate lot, you need to track which lot you are selling when you eventually dispose of shares. The two main approaches are:

FIFO (first in, first out): The default method. When you sell shares, the oldest vest lot is matched first. This is straightforward but may not always produce the best tax outcome.

Specific lot selection: You choose exactly which vest lot to sell. This gives you more control. For example, you might sell shares from a recent vest (short-term loss) to offset gains elsewhere, or sell shares from an older vest (long-term, qualifying for a capital gains discount) for a more favourable tax rate.

Vested vs unvested: keep them separate

Unvested RSUs are not yours yet. They are a promise of future compensation that depends on you remaining employed (and possibly meeting other conditions). Mixing unvested grants with real holdings distorts your portfolio's actual value.

Track them separately:

• Vested shares go in your main portfolio with accurate cost basis and dates, ready for tax reporting.
• Unvested grants can be tracked in a separate portfolio or spreadsheet for planning purposes, but should not be mixed with holdings you actually own.

Common RSU tracking mistakes

Missing cost basis. If you do not record the FMV at each vest date, you have no cost basis when you sell. Some brokers report $0 cost basis on tax forms for RSU shares, which can lead to overpaying tax if you do not correct it.

Wrong acquisition date. The acquisition date is the vest date, not the grant date. Using the grant date can incorrectly qualify shares for long-term capital gains treatment earlier than they should.

No sell-to-cover record. Forgetting to record the immediate sale from sell-to-cover leaves phantom shares in your portfolio and creates incorrect tax reports.

Ignoring lot-level tracking. Treating all RSU shares as one lump makes it impossible to calculate accurate capital gains per lot. Each vest is a distinct lot.

Australian tax considerations

In Australia, RSU income is taxed under the Employee Share Scheme (ESS) rules. Key points:

Taxing point. For tax-deferred RSUs, the taxing point is typically the vest date (when disposal restrictions lift). The FMV at the taxing point is assessable as employment income.

The 30-day ESS rule. For ESS interests acquired on or after 1 July 2015, if you sell RSU shares within 30 days of the deferred taxing point (usually the vest date), the taxing point shifts to the date of disposal. This can move income from one financial year to the next if the vest and sale straddle the end of the financial year.

CGT discount. If you hold vested shares for more than 12 months from the vest date before selling, the capital gain qualifies for the 50% CGT discount. Shares held for less than 12 months are taxed at your marginal rate.

Franking credits. If your company pays franked dividends on vested shares, these are treated the same as dividends on any other Australian shares.

US tax considerations

In the US, RSU taxation follows a two-stage process:

At vest: ordinary income. The FMV of the shares on the vest date is reported as ordinary income on your W-2. Federal income tax, state tax, Social Security, and Medicare are withheld (usually through sell-to-cover).

At sale: capital gains. When you sell the shares, the gain or loss is calculated as the sale price minus the FMV at vest (your cost basis). If you held the shares for more than one year from the vest date, the gain is long-term. Less than one year is short-term.

Wash sale risk. If you sell RSU shares at a loss and more shares vest within 30 days, the new vest could trigger a wash sale, disallowing the loss. This is easy to overlook with frequent vesting schedules.

Broker cost basis issues. Many brokers report $0 or an incorrect cost basis for RSU shares on Form 1099-B. You are responsible for reporting the correct basis on Form 8949.

Tracking RSUs in TrackMyShares

TrackMyShares supports lot-level tracking for RSUs. You can record each vest as a separate transaction with the correct date and FMV, record sell-to-cover sales, and generate tax reports that break down capital gains per lot.

For a step-by-step walkthrough of setting up RSU tracking, including the two-portfolio approach for vested and unvested shares, see our detailed guide: tracking RSUs in TrackMyShares.

If you have years of RSU history to import, the CSV merge tool can help you combine data from multiple sources into a single import file.

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Start tracking your RSUs with accurate cost basis and lot-level tax reporting. Sign up for TrackMyShares or read the RSU tracking guide to get started.