Start with the vest-date compensation
For the ordinary settlement scenario modeled here, units multiplied by vest-date value produce the compensation input. The calculator estimates withholding and regular tax on that amount. Unusual settlement arrangements need separate treatment.
Track the basis of retained shares
After shares are sold or withheld for taxes, the retained shares have a modeled basis tied to the vest-date price. A later gain is the retained share count multiplied by the later price minus the vest-date price, not the entire sale proceeds.
A worked gain comparison
A retained share with $250 of modeled basis sold later for $300 has $50 of post-vest gain. The $250 vest-date compensation is not added again to that capital gain. Actual broker basis reporting should be reconciled with payroll records.
Holding period and losses matter
The capital-gains rate here is a user assumption. The tool does not infer short- or long-term treatment. Negative gains are displayed as losses without assuming an immediate tax benefit, because loss limitations and the rest of the return matter.
Sources and further reading
This guide explains a tool and its assumptions. It is not personalized financial, tax, or legal advice.
Put the explanation to work.
Change the assumptions, compare the results, and export the numbers without creating an account.
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