How to File an 83(b) Election Within the 30-Day Deadline

It applies when you receive property, usually shares, that is subject to a substantial risk of forfeiture such as vesting. Typical cases:

• Founders who buy restricted stock that vests over time.
• Early employees who receive restricted stock instead of options.
• Employees who early exercise options into unvested shares, if the plan allows it.

It doesn't apply to ordinary stock options, because you haven't received property until you exercise. Without an election, you're generally taxed as the shares vest, on their value at each vesting date. With one, you're taxed on the value at grant minus what you paid. If you pay full fair market value, the taxable amount at grant is typically zero, and later growth isn't taxed as compensation. The tradeoff: if you leave and forfeit unvested shares, you can't recover the tax you paid.

Include the details the IRS requires. Use this outline and confirm with the current IRS instructions or your tax adviser:

1. Your name, address and taxpayer identification number.
2. A statement that you're making an election under Section 83(b) of the Internal Revenue Code.
3. A description of the property: the number of shares, the company name and the class of stock.
4. The date of transfer and the tax year it falls in.
5. The restrictions, such as vesting terms and repurchase rights.
6. The fair market value at the time of transfer, and the amount you paid.
7. The amount to include in income, which is the value minus what you paid.
8. Your signature and the date.

The IRS also publishes an optional form for this election. Check current guidance to see whether you should use it. Keep the wording consistent with your stock purchase agreement.

Treat this as a deadline-driven task. Count the 30 days from the date the stock was transferred to you, including weekends and holidays, and plan to mail it in the first week.

1. Prepare two copies of the signed election and a cover letter.
2. Send one to the IRS office listed for your state in the instructions, by certified mail with return receipt requested, or through an approved delivery service.
3. Keep the postmarked receipt, the return receipt when it comes back and a copy of the letter.
4. Give the company a copy for its records. Ask your tax adviser whether the current regulations also require you to provide one, and the company needs it for payroll and cap table purposes either way.
5. Mark your calendar to confirm the receipt arrived.

Electronic filing options have been evolving, so check current IRS guidance before assuming mail is the only route.

The election is generally invalid, and the default treatment applies: you're taxed as the shares vest. If the company's value rises quickly, each vesting date can produce ordinary income based on a much higher price than at grant, with taxes due even if you can't sell the shares. Missing the deadline is the most expensive mistake in this area.

The deadline is strict, and relief is limited. Ask a tax attorney immediately if you think you've missed it. It's far cheaper to file early and confirm receipt than to fix it later.

Founders also tend to forget it when they re-vest stock during a financing or exchange shares. Each new grant of restricted stock has its own 30-day window, and some changes to vesting terms can be treated as a new transfer, so check with counsel each time.

Keep a register with each person's name, grant date, filing date, proof of mailing and any IRS confirmation. Reconcile it against your cap table whenever restricted stock is issued. Our guide on 83(b) election tracking and IRS verification goes into how to verify filings, and the cap table template shows where to record them.

For context on why early-stage tax details matter, US data show that 22.1 percent of new establishments opened in the year ended March 2024 had closed within a year¹. If shares are forfeited or the company fails, taxes already paid on an election may not be recoverable, which is why your adviser will weigh the value at grant carefully.