Glossary
Short, educational definitions for RSU and equity tax language. These explain terms used in our guides, not personalized tax advice.
23 terms
83(b) election
An IRS election to tax restricted stock at grant. rare for RSUs; timing matters for options.
AMT (Alternative Minimum Tax)
A parallel tax system that can tax ISO exercise spread even without a sale.
Blackout period
A window when insiders cannot trade company stock. may affect when you can sell.
Capital gains
Tax on the change in value when you sell an investment. after you already own it.
Cost basis
Your starting value for tax when you sell shares. often the vest FMV for RSUs.
ESPP (Employee Stock Purchase Plan)
A plan to buy company stock at a discount through payroll. different tax rules than RSUs.
Fair market value (FMV)
What the stock was worth on a given date. often used to measure RSU income at vest.
Form 1099-B
Broker form reporting stock sales. proceeds and often incomplete basis for RSUs.
Form W-2
Employer wage statement. where RSU vest income usually appears.
Grant date
The date your company awards the equity grant, not necessarily when you owe tax.
ISO (Incentive Stock Option)
A statutory stock option with special tax rules. possible AMT at exercise.
Marginal tax rate
The tax rate on your next dollar of income, not the average rate on all income.
NSO (Non-Qualified Stock Option)
A stock option taxed as wages on the spread at exercise in typical cases.
Ordinary income
Regular wage-type income taxed at standard rates. how many RSU vests are treated.
RSU (Restricted Stock Unit)
A company promise to deliver shares (or cash) after you meet vesting conditions.
Same-day sale
Selling shares the same day they vest or are delivered. often to cover tax or take cash.
Secondary sale
Selling private company shares to a buyer other than the company. before or after IPO.
Sell-to-cover
Your employer sells some vested shares to pay withholding tax. you keep the rest.
Supplemental wages
Pay outside your regular paycheck. bonuses and many RSU vests. with special withholding rules.
Tender offer
A company or buyer offer to purchase shares from shareholders. a liquidity event.
Vest date
The date RSUs or other awards vest. often when wage income is recognized for RSUs.
Vesting
The schedule when your equity grant becomes yours after meeting time or performance conditions.
Withholding
Tax your employer collects from pay during the year. an estimate, not your final bill.