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If you received stock that vests, an 83(b) election tells the IRS to tax you now, while your shares are worth almost nothing, instead of taxing you as they vest and become valuable. It is a short form with a hard deadline.
When you buy founder stock subject to vesting, the default tax treatment is not in your favour. An 83(b) election flips it.
You are taxed each time a tranche vests, on the difference between what you paid and what the shares are worth on that date. As the company grows, every vesting event becomes a taxable event at a higher and higher valuation, on stock you cannot sell to pay the bill.
You elect to be taxed on the whole grant now, when the shares are typically worth a fraction of a cent each and the tax is often close to zero. Future growth is then treated as capital gain when you eventually sell, and your holding period starts running immediately.
The main case. If your founder shares are subject to a repurchase right that lapses over time, that is vesting, and the election applies to you.
If your plan allows early exercise and you exercise unvested options, you are holding restricted stock and the same 30 day clock starts.
Anyone receiving stock subject to vesting, not just employees. Advisor grants of restricted stock are frequently missed.
If you received fully vested stock with no repurchase right, or you hold options you have not exercised, there is generally nothing to file. Check rather than assume.
The deadline runs from the date the stock is transferred to you, not from the date you signed something, not from incorporation, and not from your first board meeting.
I think I missed the deadline. What now?
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Tell us the exact issuance date first, because founders are often wrong about it in their own favour. If the window really has closed there is no way to file late, but there may be things worth doing about the shares themselves. That conversation is worth having quickly rather than at your next raise.
Is there ever a reason not to file?
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Rarely, but yes. If you pay real money for stock at a meaningful valuation and you genuinely expect the company to fail, an election can mean paying tax on value that never materialises. For typical founder stock issued at formation, the calculation is not close.
I am not a US taxpayer. Does this apply to me?
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It can, and the answer depends on your residency, where you work, and your treaty position. Non US founders holding stock in a Delaware company should get this checked rather than assume it is a US-only concern.
Does filing an 83(b) affect QSBS?
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They are separate rules, but they interact through your holding period, and both are decided early. If your stock is likely to qualify as QSBS, you want both handled together rather than one at a time.
Can you file it for me?
We prepare it, tell you exactly where to send it, and record it in the company's files. The election itself has to be signed and filed by you.
Send us your stock purchase agreement. We will tell you the date the clock started and whether you are still inside it.
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