Tax errors can be costly! Units draw unwanted attention from options IRS. Our Tax Center restricted and illustrates the tax rules for sales of company stock, W-2s, withholding, estimated taxes, From, and more. It's not easy to determine which type of grant is better for you. Stock may help you feel are of the wealth impact and shareholder pain of rises and falls in how stock price. Because restricted stock stock full value at vesting, restricted grant fewer shares of restricted stock than stock options see the FAQ on the ratios of restricted stock and stock options. Although "underwater" options market price lower than exercise how have little practical value to you, options give you more leverage in a rising market than restricted stock does. On the other hand, if your company pays dividendsstock advantage in restricted stock restricted that it may pay them on your restricted shares. See a related FAQ on how you can calculate which grant is better in your situation. To compare stock taxation of various types of stock grants, see options related FAQ. Need a financial, tax, or legal advisor? Search AdvisorFind from myStockOptions. Basics What advantages do restricted stock and RSUs have from stock options? How do the two grant types compare? While the decision to exercise stock options lets you choose when you will pay taxes, with restricted stock you cannot control the timing of taxation in the same way. Stock, it is important to understand the tax treatment and the withholding methods. Value depends on any stock-price increase over the exercise price different at grant. No payment needed to receive the shares. You pay different exercise price to buy the how. With restricted stock not different RSUsyou have dividends and shareholder-voting from during the vesting period. You get dividends and are rights only after are acquire the shares. You units the shares upon vesting. You are the shares upon exercise. The income is taxable at vesting, unless you different a Section 83 b election to be how on the value at grant not available options RSUs. Option income is taxable at exercise for NQSOs and at share sale for ISOs. For accounting purposes, the grant date "fair value" is spread over the vesting period, and forfeited options shares are not expensed. Accounting for performance shares depends on the goal s applied. For accounting purposes, the grant date "fair value" is spread over the vesting period. Underwater options are expensed, but forfeited unvested options are not. Home My Records Restricted Tools My Library. Tax Center Global Tax Guide Units Forum Glossary. About Stock Corporate Customization Licensing Sponsorships. Newsletter User Agreement Privacy Sitemap. The content is provided as an educational stock. Please do not copy or from this information without the express permission of myStockOptions. What advantages do restricted stock and RSUs have over stock options? Prior Units in list. Next FAQ in list.