83(b) Election for Founders: The 30-Day Deadline Explained

What is an 83(b) election?

An 83(b) election is a filing with the IRS in which someone who receives stock subject to vesting chooses to be taxed on its value at the time it is transferred, instead of as it vests. Founders file it because their shares are usually worth very little at formation. It must be filed within 30 days of the transfer.

Why founders file it on restricted stock

Founder shares usually come with vesting: if you leave early, the company can buy back your unvested shares. Under section 83 of the tax code, property received for services that can be forfeited like this is generally taxed when the restriction lapses, which means as each tranche vests. The amount taxed is the value at that time minus what you paid.

That is a problem for companies that do well. If the company raises money or grows, each later tranche is taxed at a higher value, as ordinary income, even though you usually cannot sell the shares to pay the tax.

The 83(b) election flips the timing. You choose to include the value at transfer, minus the price you paid, in that year's income. Say a founder pays fair market value for her shares when the company is formed and has no assets. Value minus price paid is zero, so the election reports no income, and later vesting is not a taxable event. Her capital-gains holding period generally starts at transfer rather than at each vesting date.

The 30-day deadline

The instructions for IRS Form 15620 are direct: "An 83(b) election must be filed no later than 30 days after the date the property was transferred." The same limit is written into the statute, in section 83(b)(2).

• Day zero is the date the shares are transferred to you, usually the date in your stock purchase agreement. It is not your incorporation date or your cliff date. Confirm the date with whoever prepared the documents.
• Count 30 calendar days from that date.
• If the 30th day falls on a Saturday, Sunday or legal holiday, the IRS instructions say the election is timely if postmarked by the next day that is not. Do not plan around this.
• Because the deadline is set in the statute, do not count on relief if you miss it.
• The clock runs separately for each transfer of restricted shares.

How to file an 83(b) election

1. Collect the facts from your stock documents: number and class of shares, transfer date, price paid per share, and the vesting restrictions.
2. Complete IRS Form 15620 (revised April 2025). It asks for your name, taxpayer ID and address, a description of the shares, the transfer date, the tax year, the restrictions, the fair market value at transfer, the amount you paid, and the difference to include in income. The form is voluntary: the instructions say you can instead file a written statement that meets Treasury Regulation section 1.83-2.
3. Sign and date it.
4. Mail it to the IRS office where you file your federal income tax return; the instructions say to submit it "via mail". Use a service that gives you proof of mailing and delivery, such as certified mail with a return receipt.
5. Give a copy to the company. The instructions say you are "also required to submit a copy" to the person for whom you perform the services.
6. Keep the signed election and the proof of mailing with your permanent records.

What happens if you miss the deadline

Without a valid election, the general rule in section 83(a) applies. Each tranche is typically taxed as ordinary income when it vests, on its value at that time minus what you paid for it. If the company's value rises, so does the tax, and there may be no way to sell shares to pay it. Your capital-gains holding period for each tranche generally starts only when it vests.

If you realise you have missed it, speak to a tax adviser straight away. There may be ways to reduce the impact depending on your situation, but a late election is generally not one of them.

If your shares were fully vested when you received them, there is no restriction to elect around, and an 83(b) election is generally not needed.

Risks and trade-offs of filing

• It is effectively permanent. The IRS instructions say an 83(b) election "may not be revoked except with the consent of the IRS."
• No deduction on forfeiture. If you leave and forfeit unvested shares, section 83(b)(1) says "no deduction shall be allowed in respect of such forfeiture." When the value at transfer equals the price paid, that costs little; it matters more when shares are already worth more than you pay, for example for a cofounder joining after a priced round.
• Paying less than fair market value creates income now: the difference is taxable in the year of transfer.
• State tax treatment can differ from federal treatment.

Common 83(b) mistakes

• Waiting for the paperwork to "settle" and missing day 30.
• Assuming the company or its lawyer filed it. The election is made by the person who receives the shares.
• Not giving a copy to the company.
• Keeping no proof of mailing.
• Using the wrong transfer date, share count or price.
• Assuming it covers unexercised stock options. It applies to property transferred to you, such as restricted shares; ask an adviser about options and early exercise.

Vesting terms and the 83(b) decision belong in the same conversation as your cofounder equity split, your vesting schedule and your founders agreement.

Frequently asked questions