Section 83b Election

A section 83 b election is a letter you send to the irs electing to be taxed on your equity on the date it was granted to you rather than when it vests.

Section 83b election. The 83 b election is a provision under the internal revenue code irc that gives an employee or startup founder the option to pay taxes on the total fair market value of restricted stock at. A section 83 b election is made to include the value of restricted property at the time of transfer minus any amount you paid for the property in your income for the year it is transferred. The filing is officially deemed to have been made on the date the 83 b is mailed from the post office.

Now on to the how to file your 83 b election instructions. You must file your 83 b election with the irs within 30 days of receiving your stock grant or stock options. Section 83 b election tells the internal revenue service irs that you want to report income tax the year your stock was granted instead of when it is vested.

This means you will report income at the current stock price when the stock is granted to you instead of the stock price the year the stock vests.