An IRS filing that lets you pay taxes on restricted stock at grant-date value rather than as shares vest — critical for early-stage founders.
An 83(b) election is an IRS tax filing that allows someone receiving restricted stock to pay taxes on the value of the shares at the time of the grant, rather than as they vest. For early-stage founders, this almost always means paying taxes on a very low value (often fractions of a penny per share) instead of paying taxes on a much higher value as the shares vest and the company grows.
The filing must be made within 30 days of receiving the restricted stock. There are no extensions and no exceptions. Missing this deadline can result in significant tax consequences because the IRS will tax each vesting event at the fair market value of the shares at that time, which could be substantially higher.
Filing an 83(b) involves completing the IRS form, mailing it via certified mail (keep the receipt as proof), and attaching a copy to your personal tax return for that year. The form itself is straightforward. The deadline is what matters most.
Takeoff can generate the 83(b) election form pre-filled with your company details.