Updated July 28, 2026. Quick answer: For RSUs the two are the same mechanic at different volumes — sell to cover sells enough to fund withholding, same-day sale sells everything, and because your basis equals the vest-date value there is almost no gain either way. For stock options the difference is real, because there a same-day sale also has to fund the exercise price and can change the character of the entire transaction.
For RSUs: same event, different quantity
At vest, IRC §83(a) puts the full market value into your income, and Treas. Reg. §1.83-4(b)(1) gives you a basis equal to that amount. Sell within a day or two and the sale price is within pennies of your basis — so the capital gain is negligible and short-term. That is true whether you sell a third of the shares or all of them.
| Sell to cover | Same-day sale | |
|---|---|---|
| Shares sold | Enough to fund withholding | All of them |
| Ordinary income at vest | Identical | Identical |
| Capital gain on the sale | Negligible | Negligible |
| Position afterwards | Concentrated | Flat |
So for RSUs this is not a tax question at all. It is the diversification question in disguise: how much of your employer do you want to own once the withholding is handled? That is the decision actually being made.
For options: a genuinely different transaction
This is where the terms stop being interchangeable. An option has an exercise price, so any sale at exercise must raise two amounts — the cost of exercising and the withholding — which means far more shares change hands than most people expect. And with incentive stock options, selling in the same year as the exercise changes the tax character of the whole exercise. The options version of this question is a different page, and the answer there is not “nearly identical.”
Wherever shares are sold, check the basis on the 1099-B. The Form 1099-B instructions are explicit that a broker “cannot increase initial basis for income recognized upon the exercise of a compensatory option or the vesting or exercise of other equity-based compensation arrangements granted or acquired after 2013” (Treas. Reg. §1.6045-1(d)(6)(ii)(A), whose operative words are that a broker “may not increase” initial basis for that income). That is a prohibition, not an option. Note what the date attaches to: when the award was granted or acquired, not when you got the stock — for pre-2014 grants a broker may include the compensation element, which is why 1099-Bs are inconsistent rather than uniformly wrong. This is how the same money gets taxed twice.
Sources
IRC §422(a)(1) (holding periods); IRC §422(c)(2) (limit on the amount includible on a disqualifying disposition); IRC §56(b)(3) (alternative minimum tax treatment of incentive stock options, and the same-taxable-year rule); IRC §3121(a)(22) (FICA exclusion for statutory options). All quoted from the United States Code as in force July 2026.
This states what the cited authority says and what plan documents actually do. It is not tax advice, and your employer’s plan controls which of these elections you are offered at all.