Get expert tax and accounting help!Call(212) 641-0673
What is Double Trigger RSUs?
Tax Strategy & Planning

What is Double Trigger RSUs?

Restricted Stock Units (RSUs) are a widely used form of equity compensation. They are especially relevant in tech startups and pre-IPO companies. Instead of standard RSUs that vest based on time alone, double-trigger RSUs necessitate two conditions to be met before shares become available.

By George DimovPublished 5 min read
5-star rated20+ years in NYCAll 50 statesEvenings & weekends

12+

Years Serving NYC

50

States Covered

5★

Rated on Yelp

150,000+

Returns Filed

Open

Evenings & Weekends

Section 01

How Do Double Trigger RSUs Work?

Instead of receiving shares at a specific vesting schedule like traditional RSUs, double-trigger RSUs necessitate:

  • Time-Based Vesting: The employee should remain with the company for a predetermined period.
  • Liquidity Event: The company should go public (IPO) or be acquired.

Until both conditions are met, no actual stock is delivered. Accordingly, no taxes are owed.

Section 02

Why Do Companies Use Double Trigger RSUs?

Pre-IPO companies prefer double-trigger RSUs because they prevent employees from holding stock in a private company with limited liquidity. By linking vesting to an IPO or acquisition, companies make sure that employees can actually sell shares once they are received.

How They Are Taxed

Taxation only occurs when both conditions are satisfied as presented bekıw

  1. At Vesting: The fair market value of shares is treated as ordinary income and reported on the employee’s W-2.
  2. At Sale: If the shares are sold later, any additional profit is taxed as below:
    • Short-term capital gains (if held for less than a year) at ordinary income rates.
    • Long-term capital gains (if held for over a year) at reduced capital gains rates.
Section 03

What Happens If You Leave Before an IPO?

If employment ends before both triggers occur, unvested shares are forfeited. Instead of standard RSUs, double-trigger RSUs do not create taxable income unless fully vested.

How RSUs are taxed should be acknowledged by the taxpayers in order to prevent unnecessary mistakes and establish a healthy structure. If you need further assistance with RSU taxation, professional guidance can present a different aspect for full compliance.

No cost to start

Questions about your specific situation?

Fifteen minutes with a CPA who handles this every week. We will walk you through your options — no sales pitch, no obligation.

Client reviews

What our clients say

George has prepared and maintained the corporate accounting and provided consultant services for my company for a number of years. He has always done an outstanding, professional and courteous job. I feel that his rates are very fair and he provides a great value for the cost.
Alfonso V.
Excellent service and very professional. George and his team have been handling my business taxes for years and I couldn't be happier with the results. They are always available to answer questions and provide expert advice.
Michael R.
I've been working with Dimov CPA for both personal and business taxes. Their attention to detail and knowledge of tax law has saved me thousands. Highly recommend to anyone looking for a reliable CPA in NYC.
Sarah L.

Ready when you are

Let's talk about the next step

A CPA will review your situation and give you a straight answer. No commitment, no jargon.

Google ReviewsYelp ReviewsThumbtack Top ProTaxBuzz Reviews