Are RSUs ever taxed as long term capital gains?
Yes. You incur income tax on the RSU on they date they vest. At this point you own the actual shares and you can decide to sell them or to hold them. If you hold them for the required period, and sell them later, the difference between your price at vesting and the sales price would be taxed as long term capital gains. Caution: if you decide to hold, you are still liable to pay income tax in the year they vest. You have to pay taxes on income that you haven't made yet. This is fairly dangerous: if the stock goes down, you may lose a lot of this tax payment. Technically you could recover some of this through claiming capital losses, but that this is severely restricted: the IRS makes it much easier to increase taxes through gains than reducing taxes through losses. I don't know the legal framework for RSUs, so I'm not sure what is mandatory and what is chosen by the company issuing them. I recently reviewed one companies offering and it basically looked like a flat purchase of stock on the VEST date. So even if I got a zillion shares for $1 GRANTED to me, if it was 100 shares that vested at $100 on the 1st, then I would owe tax on the market value on the day of vest. Further, the company would withhold 25% of the VEST for federal taxes and 10% for state taxes, if I lived in a state with income tax. The withholding rate was flat, regardless of what my actual tax rate was. Capital gains on the change from the market value on the VEST date was calculated as short-term or long-term based on the time since the VEST date. So if my 100 shares went up to $120, I would pay the $20 difference as short term or long term based on how long I had owned them since the VEST. That said, I don't know if this is universal. Your HR folks should be able to help answer at least some of these questions, though I know their favorite response when they don't know is that you should consult a tax professional. Good luck.
Capital gains tax is an income tax upon your profit from selling investments. Long-term capital gains (investments you have held for more than a year) are taxed significantly less than short-term gains. It doesn't limit how many shares you can sell; it does discourage selling them too quickly after buying.  You can balance losses against gains to reduce the tax due. You can look for tax-advantaged investments (the obvious one being a 401k plan, IRA, or equivalent, though those generally require leaving the money invested until retirement). But in the US, most investments other than the house you are living in (which some of us argue isn't really an investment) are subject to capital gains tax, period. Here are three key factors that you do not explicitly state: So while I cannot say exactly why the tax law is the way it is, I can infer that it encourages long-term investments rather than short-term, which would seem to be a good thing for society overall.  The fast that capital gains are taxed at all somewhat discourages cashing out investments (although I suspect it's more of a nuisance factor - the cash received is likely more on an incentive that the tax is a disincentive). "What you're talking about is called ""tax gain harvesting,"" and it is considered good tax management. From The Oblivious Investor, investors in the 10% or 15% bracket pay 0% tax on long-term capital gains. For an interesting take on never paying income taxes again, check out Go Curry Cracker. You can claim up to $70,000 or so in capital gains before paying any taxes if you are the 10% or 15% tax bracket." "RSUs are not ""essentially cash"". ""R"" in the RSU stands for restricted. These awards have strings attached, and as long as the strings are attached - you don't really own the money. As such, most banks do not include RSUs in the income considerations. Some do, especially if they have a specific agreement with your employer (check your HR/benefits coordinator). Specifically for mortgage loan,  where the underwriting is very strict, I'm not aware of banks that include RSUs as income without a specific agreement with the employer as a perk. For credit cards/car loans, where you just need to write a number, they would probably care less. Some banks (but not all) consider past performance, and would include bonuses (and maybe RSUs) if you can show several consecutive years of comparable bonuses." "Appreciation of a Capital Asset is a Capital Gain.   In the United States, Capital Gains get favorable tax treatment after being held for 12 months. From the IRS newsroom: Capital gains and losses are   classified as long-term or short-term,   depending on how long you hold the   property before you sell it. If you   hold it more than one year, your   capital gain or loss is long-term. If   you hold it one year or less, your   capital gain or loss is short-term. The tax rates that apply to net   capital gain are generally lower than   the tax rates that apply to other   income. For 2009, the maximum capital   gains rate for most people is15%. For   lower-income individuals, the rate may   be 0% on some or all of the net   capital gain. Special types of net   capital gain can be taxed at 25% or   28%. The IRS defines a Capital Asset as ""most property you own"" with a list of exclusions found in Schedule D Instructions.  None of the exclusions listed relate to Bond ETFs." No. Income inside an RRSP is sheltered from income tax until you withdraw it. That is, indeed, the major benefit of RRSPs. Note that you will eventually declare this as income. Consider the following case: - in 2015, you make $1000 in income. - in 2015, you contribute $100 to your RRSPs. You store this in an account that pays interest, rather than investing it in stocks, bonds, or mutual funds. - between 2015 and 2025, your money makes an additional $100 in interest. - in 2025, you are retired and pull out the entire amount in your RRSP, i.e. $200. Now, between 2015 and 2025, you did not declare the income from interest. You'd have had to do this if the money was in a regular bank account (instead of an RRSP or a TFSA). Indeed, your bank would have issued tax forms in that case. But you don't report income sheltered in an RRSP. This is good, as it increases the power of compounding. In 2015, you pay tax on only $900 rather than the full $1000. In 2025, you pull out the entire $200. You report all $200 as income (or, actually, as a withdrawal from your RRSP, but it's the same thing). You pay tax on the initial $100 investment (which you did not do in 2015), and you also pay tax on the $100 that your investment has made (and which you are now pulling out). The hope is that your income is now lower, as you are retired. So you'll end up paying less income tax. Plus, your investment has had many years of opportunity to compound, tax-free. TL;DNR: You don't pay tax on, or report gains in, an RRSP account. The bank or investment house won't even issue tax forms, not until you withdraw the money. Long ago when I was applying for my first mortgage I had to list all my income and assets. At the time I had some US Savings Bonds from payroll deduction. I asked about them. The loan officer told me that unless I was willing/planning on selling them to make the down payment, they were immaterial to the loan application. So unless you have a habit of turning RSUs into cash, or are willing to do so for the down payment, it is no different from having money in a 401K or IRA: the restrictions on selling them make them illiquid. No, it's not all long-term capital gain.  Depending on the facts of your situation, it will be either ordinary income or partially short-term capital gain.  You should consider consulting a tax lawyer if you have this issue. This is sort of a weird little corner of the tax law.  IRC §§1221-1223 don't go into it, nor do the attendant Regs.  It also somewhat stumped the people on TaxAlmanac years ago (they mostly punted and just declared it self-employment income, avoiding the holding period issue).  But I did manage to find it in BNA Portfolio 562, buried in there.  That cited to a court case Comm'r v. Williams, 256 F.2d 152 (5th Cir. 1958) and to Revenue Ruling 75-524 (and to another Rev. Rul.).  Rev Rul 75-524 cites Fred Draper, 32 T.C. 545 (1959) for the proposition that assets are acquired progressively as they are built.  Note also that land and improvements on it are treated as separate assets for purposes of depreciation (Pub 946). So between Williams (which says something similar but about the shipbuilding industry) and 75-524, as well as some related rulings and cases, you may be looking at an analysis of how long your property has been built and how built it was.  You may be able to apportion some of the building as long-term and some as short-term.  Whether the apportionment should be as to cost expended before 1 year or value created before 1 year is explicitly left open in Williams.  It may be simpler to account for costs, since you'll have expenditure records with dates. However, if this is properly ordinary income because this is really business inventory and not merely investment property, then you have fully ordinary income and holding period is irrelevant.  Your quick turnaround sale tends to suggest this may have been done as a business, not as an investment. A proper advisor with access to these materials could help you formulate a tax strategy and return position.  This may be complex and law-driven enough that you'd need a tax lawyer rather than a CPA or preparer.  They can sort through the precedent and if you have the money may even provide a formal tax opinion.  Experienced real estate lawyers may be able to help, if you screen them appropriately (i.e. those who help prepare real estate tax returns or otherwise have strong tax crossover knowledge). As mentioned by Dilip, you need to provide more details. In general for transacting on stocks; Long Term: If you hold the stock for more than one year then its long term and not taxable. There is a STT [Securities Transaction Tax] that is already deducted/paid during buying and selling of a stock. Short Term: If you hold the stock for less than one year, it's short term gain. This can be adjusted against the short term loss for the financial year. The tax rate is 10%. Day Trading: Is same as short term from tax point of view. Unless you are doing it as a full time business. If you have purchased multiple quantities of same stock in different quantities and time, then when you selling you have to arrive at profit or loss on FIFO basis, ie First in First Out Assuming that taxes were withheld when you received the options, you would now only owe tax on the profit from the sale of the stock.  The cost basis would be whatever you bought the stock for (the strike price of the options in this case), and the profit will be the total amount received from the sale minus the total cost of those shares. Since you bought the stock more than one year ago, you will get taxed at the long-term capital gains rate of 15% (unless you are in the 39.6% tax bracket, in which case the rate is 20%). As with all tax advice on this site, you need to check with a tax specialist when you actually file, but that should give you a rough indication of what your tax liability is. Gold ETFs are treated different than stock ETFs, as a collectable. This makes long-term investing in gold ETFs (for one year or longer) subject to a relatively large capital gains tax (maximum rate of 28%, rather than the 15% rate that is applicable to most other long-term capital gains). Read The Gold Showdown: ETFs Vs. Futures for more details. Long-term capital gains, as you note, get special tax treatment.  They are lower than regular income tax rates.  Short-term capital gains aren't penalized, they are just treated as regular income under the regular rates.  So, from a tax perspective, the day-trader gets by the same way as the rest of us because they are paying the same rates on the same progressive income tax scale. "You mention ""early exercise"" in your title, but you seem to misunderstand what early exercise really means. Some companies offer stock options that vest over a number of years, but which can be exercised before they are vested. That is early exercise. You have vested stock options, so early exercise is not relevant. (It may or may not be the case that your stock options could have been early exercised before they vested, but regardless, you didn't exercise them, so the point is moot.) As littleadv said, 83(b) election is for restricted stocks, often from exercising unvested stock options. Your options are already vested, so they won't be restricted stock. So 83(b) election is not relevant for you. A taxable event happen when you exercise. The point of the 83(b) election is that exercising unvested stock options is not a taxable event, so 83(b) election allows you to force it to be a taxable event. But for you, with vested stock options, there is no need to do this. You mention that you want it not to be taxable upon exercise. But that's what Incentive Stock Options (ISOs) are for. ISOs were designed for the purpose of not being taxable for regular income tax purposes when you exercise (although it is still taxable upon exercise for AMT purposes), and it is only taxed when you sell. However, you have Non-qualified Stock Options. Were you given the option to get ISOs at the beginning? Why did your company give you NQSOs? I don't know the specifics of your situation, but since you mentioned ""early exercise"" and 83(b) elections, I have a hypothesis as to what might have happened. For people who early-exercise (for plans that allow early-exercise), there is a slight advantage to having NQSOs compared to ISOs. This is because if you early exercise immediately upon grant and do 83(b) election, you pay no taxes upon exercise (because the difference between strike price and FMV is 0), and there are no taxes upon vesting (for regular or AMT), and if you hold it for at least 1 year, upon sale it will be long-term capital gains. On the other hand, for ISOs, it's the same except that for long-term capital gains, you have to hold it 2 years after grant and 1 year after exercise, so the period for long-term capital gains is longer. So companies that allow early exercise will often offer employees either NQSOs or ISOs, where you would choose NQSO if you intend to early-exercise, or ISO otherwise. If (hypothetically) that's what happened, then you chose wrong because you got NQSOs and didn't early exercise." It looks like it has to deal with an expiration of rights as a taxable event. I found this link via google, which states that  Not only does the PSEC shareholder have a TAXABLE EVENT, but he has   TWO taxable events. The net effect of these two taxable events has   DIFFERENT CONSEQUENCES for DIFFERENT SHAREHOLDERS depending upon their   peculiar TAX SITUATIONS. The CORRECT STATEMENT of the tax treatment of unexercised PYLDR rights   is in the N-2 on page 32, which reads in relevant part as follows: “…, if you receive a Subscription Right from PSEC and do not sell or   exercise that right before it expires, you should generally expect to   have (1) taxable dividend income equal to the fair market value (if   any) of the Subscription Right on the date of its distribution by PSEC   to the extent of PSEC’s current and accumulated earnings and profits   and (2) a capital loss upon the expiration of such right in an amount   equal to your adjusted tax basis (if any) in such right (which should   generally equal the fair market value (if any) of the Subscription   Right on the date of its distribution by PSEC).” Please note, for quarterly “estimated taxes” purposes, that the   DIVIDEND taxable events occur “ON THE DATE OF ITS DISTRIBUTION BY PSEC   (my emphasis),” while the CAPITAL LOSS occurs “UPON EXPIRATION OF SUCH   RIGHT” (my emphasis). They do NOT occur on 31 December 2015 or some   other date. However, to my knowledge, neither of the taxable events he mentions would be taxed by 4/15. If you are worried about it, I would recommend seeing a tax professional. Otherwise I'd wait to see the tax forms sent by your brokerage. In general, liquidity is a good thing, because it means it is easy for you to buy or sell a stock.   Since high liquidity stocks have a lot of trading, the bid-ask spreads tend to be pretty low.  That means you can go into the market and trade easily and cheaply at just about any time.  For low liquidity stocks, the bid-ask spreads can get pretty high, so it can make it hard or expensive to get into or out of your trades. On the flip side, everyone pays attention to high liquidity stocks, so it's harder to get an edge in your trading.  For a company like Microsoft there are 30-50 full time analysts that cover them, thousands of professional traders and millions of investors in general all reading the same new articles and looking through the same financials as you.  But in low liquidity stocks, there probably aren't any analysts, a few professional traders and maybe a few thousand total investors, so it can be easier to find a good buy (or sell). In general, high liquidity doesn't mean that everyone is selling or everyone is buy, it just means everyone is trading.