To file an 83(b) election, complete IRS Form 15620 or a compliant written statement, sign it, and file it online or by mail within 30 days after the restricted stock is transferred to you. Give a copy to the company and keep proof of timely filing.
The election measures taxable compensation at transfer rather than at later vesting:
- If the value rises before vesting: you owe less compensation tax.
- If the shares are forfeited or become worthless: the tax paid on the election is not refunded.
How do you file an 83(b) election, step by step?
First, confirm you received restricted property. An unexercised option or an RSU promise is not the same as owning restricted stock. For an early exercise, identify the date the shares were transferred, rather than assuming the grant date starts the clock.
- Gather the stock documents. You need the transfer date, number and description of shares, restrictions, fair market value at transfer, and the amount you paid.
- Complete and sign the election. Use IRS Form 15620, or a written statement containing the information required by the IRS. Include your taxpayer identification number and the tax year.
- File within 30 days of transfer, online or by mail. Use one method, not both.
- Online: since July 2025, the IRS has accepted Form 15620 online after you verify your identity with ID.me, and you get a confirmation you can download the same day.
- By mail: IRS Publication 525 directs you to the IRS service center where you file your return, using the state-specific address for a return without a payment in the Form 1040 instructions. Verify the current address and use a trackable method.
- Weekends and holidays: if day 30 falls on a weekend or legal holiday, the deadline moves to the next business day.
- Send copies. Give a copy to the person or company for whom you performed the services, even if you filed online; the downloaded IRS confirmation can serve as that copy. If someone other than you received the property, that recipient also needs a copy.
- Keep evidence. Retain the signed election, stock documents, the fair market value support, and proof of timely filing, such as the online confirmation or a certified-mail receipt. For property transferred after 2015, you do not attach the election to your annual income-tax return, even if an older template says to.
Check founder stock priced below a cent before filing online. At launch the form accepted only two decimal places per share; an October 2025 update allowed four, such as $0.0001. If your price needs more decimal places than that, file on paper and keep your valuation records.
How does the 83(b) election change your tax bill?
Restricted stock often comes with a condition: leave the company before it vests and you may lose the shares.
- Without an election: compensation is generally measured when the stock becomes substantially vested, meaning it is transferable or no longer subject to a substantial risk of forfeiture.
- The taxable amount: the stock’s value at that time minus what you paid for it. If the company grows before vesting, the compensation amount can grow too, even when there is no market where you can sell the shares.
An 83(b) election moves that measurement to the transfer date. Pay the full fair market value then, and the taxable spread can be zero.
Later appreciation generally does not become additional compensation as the stock vests. A later sale produces a capital gain or loss, with the rate depending on holding periods and other rules.
The tradeoff is that you choose before knowing how the investment turns out. You generally cannot recover tax on the amount elected into income simply because you later forfeit the shares.
Why file when the spread is zero
Many founders have no taxable spread. Buy 2,000,000 shares at formation for $0.0001 each, when that is also the fair market value, and the election adds no income. File it anyway, on time.
A timely election still does real work:
- Capital-gain holding period: it starts at transfer rather than at each vesting date, which decides whether a sale years later is long-term.
- QSBS holding period: for restricted stock, it also generally starts the holding period for qualified small business stock, where the exclusion steps up at three, four, and five years for shares acquired after July 4, 2025.
- No income at each vesting date: without the election, each vesting date can also create compensation income if the value has risen by then.
What is the tax with and without the election?
| Event | With 83(b) | Without |
|---|---|---|
| Cash paid for shares | $10,000 | $10,000 |
| Income at transfer | $0 | $0 |
| Income at vesting | $0 | $40,000 ($50,000 minus $10,000) |
| Basis after vesting | $10,000 | $50,000 |
| Gain on $80,000 sale | $70,000 | $30,000 |
The election changes when and how the $70,000 total increase is taxed. It does not make the increase disappear.
Long-term capital-gain treatment depends on the applicable holding period. Without an election, the capital-gain holding period generally starts at vesting.
How does an 83(b) election work with an early exercise?
Some option plans let you buy shares before the options vest. Those unvested shares can be restricted property eligible for an election.
- Nonqualified stock options: with an early-exercised NSO, paying a $1 strike price when the shares are worth $1 creates no spread at transfer. An eligible, timely 83(b) election can fix that compensation amount then. Without it, later vesting at a higher value can create compensation income.
- Incentive stock options: ISOs have different regular-tax and alternative minimum tax rules. An election on early-exercised ISO shares can affect when the AMT spread is measured; it does not remove AMT or the ISO sale requirements. Review the ISO exercise and AMT calculation separately.
What if the 30 days have passed?
Miss the window and Section 83’s normal rules apply: you recognize compensation when the stock vests, based on its value then.
If your deadline has passed, talk to a tax professional promptly and plan for compensation income at each vesting date.
Nino records the equity grants you enter in a grant form.
- Software plans start at $20/mo.
- Advisor plans add a human CPA and financial planner, with federal and state tax filing included, from $300/mo billed annually. The CPA prepares your return, and nothing is filed until you approve it.
See equity compensation planning for founders and early employees.