83(b) election: the 30-day deadline and how to file it

An 83(b) election tells the IRS to tax restricted stock when you receive it instead of when it vests, and it must be filed no later than 30 days after the shares are transferred to you. For a founder who buys shares at their fair market value on the day the company is formed, the election usually puts $0 into income and stops each later vesting date from creating a tax bill.

The rule is IRC §83, and the 30 days are in §83(b)(2). There is no extension and no late filing: the statute allows an election "not later than 30 days after the date of such transfer". This guide covers who needs one, what happens without it, a worked example across four vesting dates, how to count the 30 days, and how to file on Form 15620.

What does an 83(b) election do

Without an election, stock that you can still lose if you leave is not taxed when you receive it. Each block of shares is taxed as ordinary income on the day it vests, at its value that day minus what you paid. An 83(b) election moves that measurement to the day of transfer, when the value is usually lowest.

Under §83(a), property you receive for services is income when it becomes transferable or stops being subject to a substantial risk of forfeiture, whichever comes first. A vesting schedule with a company repurchase right on unvested shares is the usual risk of forfeiture. Publication 525 puts it plainly: when the property becomes substantially vested, "you must include its FMV, minus any amount you paid for it" in income.

With the election, you include the value at transfer minus what you paid, once, in the year of the transfer. Publication 525 adds that "generally, any later appreciation in value isn't included in your compensation" when the shares vest. Your basis becomes what you paid plus what you included in income, and any growth after the transfer waits until you sell.

Who should file an 83(b) election

Founders who receive common stock subject to vesting are the usual case, and so are early employees who get restricted stock or exercise options before they vest. The election applies to stock, not to an option: Publication 525 says you can't make it for a statutory or nonstatutory stock option itself.

The election is worth most when two things are true: the shares are worth little today, and you paid that full value for them. Then the income on Form 15620 is $0 and the election costs nothing but the filing. When you paid less than fair market value, the gap is income in the year of transfer, and that is the trade you are weighing against taxing later, larger values. What the common stock is worth is the same question an appraiser answers in a 409A valuation of your common stock, and later hires are usually measured against one.

Shares that are fully vested the day you receive them need no election, because there is nothing to defer.

A worked example: 4,000,000 founder shares over four years

A founder buys 4,000,000 shares of common stock on the day the company is formed at $0.0001 a share, paying $400, which is also their fair market value. The shares vest over four years. To keep the table short, assume 1,000,000 shares vest at each anniversary and these share values, which are illustrations, not a forecast:

Each figure in the fourth column is 1,000,000 shares times the value at vesting minus the $0.0001 paid: at year 1, $100,000 minus $100 is $99,900. Without the election, the founder owes ordinary income tax on $3,599,600 of income over four years on shares that cannot be sold, often with no cash from the company to pay it.

With the election, the founder reports $0 of income in the year of transfer, because the value received equals the $400 paid. The basis in all 4,000,000 shares is $400, and the gain is taxed only when the shares are sold.

How do you count the 30 days

The 30 days run from the date the shares are transferred to you, not from when you sign an offer letter or when the board approves a grant. Day 1 is the day after the transfer. When day 30 falls on a Saturday, Sunday or legal holiday, a filing postmarked on the next business day still counts.

That weekend rule is IRC §7503, and the Form 15620 instructions apply it to the election. Take shares transferred on Friday, October 16, 2026:

Do not plan around the last day. Sign the election the day the stock purchase agreement closes, and keep proof of when it was filed: the online confirmation, or the mailing receipt.

How to file an 83(b) election on Form 15620

Since April 2025 the IRS has published Form 15620, Section 83(b) Election. You can submit it online through an IRS Online Account or mail it to the IRS office where you file your return. A signed written statement that meets the regulation still works too.

The IRS lists Form 15620 among its mobile-friendly forms, with an Online Account required. After filling it in you can submit it online or download a copy to mail. If you mail it, Publication 525 points you to the address for your state in the Form 1040 instructions, under the heading for returns without a payment.

The form asks for the same facts the regulation, Treas. Reg. §1.83-2(e), requires in a written statement:

• Your name, address and taxpayer identification number.
• The property, for example "4,000,000 shares of common stock of Acme Inc".
• The date of transfer and the taxable year of the election.
• The restrictions, such as the vesting schedule and repurchase right.
• The fair market value at transfer, per share and in total, and what you paid.
• The amount to include in income, which is the value minus the price paid.

Then give a copy to the company. The regulation and the form both require a copy to the person for whom you perform the services, and to the holder of the shares if that is someone else.

What happens if you miss the 30-day deadline

A late election is not an election. Section 83(b)(2) sets the deadline and makes no provision for filing after it, so the shares are taxed under §83(a) as they vest, at each vesting date's value. That is why the 30 days deserve a calendar entry the day the shares are issued.

The two outcomes also differ on the clock that matters at a sale. Under Treas. Reg. §1.83-4(a), the holding period of shares with an 83(b) election begins just after the transfer. Without one, it begins just after each block vests. That date decides whether a gain is long term, and it can decide how much of the gain the QSBS exclusion takes out of federal tax, since that exclusion grows from 50% at 3 years to 100% at 5.

An election also cannot be undone on a whim. Section 83(b)(2) allows revocation only with the IRS's consent, and Publication 525 says consent is given only for a mistake of fact about the underlying transaction. If you file and later forfeit the shares, your loss is limited to what you paid minus anything you got back, and §83(b)(1) allows no deduction for the income you reported.

What the company should keep on file

The company keeps a copy of every 83(b) election it receives, beside the stock purchase agreement and the board consent that issued the shares. Due diligence for a priced round or an acquisition asks for these, and a founder's missing election is easier to discover in a folder today than in a data room later.

Track three facts per holder: the transfer date, the date the election was filed, and the fair market value it reported. That value should agree with the board consent and with any 409A valuation in force on the transfer date. Under §83(h), the company's deduction equals the amount the holder included in income, so an election that reports $0 gives the company $0 to deduct.

What to do this week

If you received stock in the last 30 days, check whether it vests and, if it does, file now:

1. Find the transfer date in your stock purchase agreement and count 30 days from it.
2. Confirm the fair market value per share and what you paid. If they are equal, the income is $0.
3. Fill in Form 15620 in your IRS Online Account and submit it, or sign it and mail it with proof of the mailing date.
4. Send a signed copy to the company the same day.
5. Save the confirmation with your tax records and give the company a copy for its equity records.

The equity records sit next to the books that diligence will read. LedgerIt keeps a startup's books in order from the first month, so the cap table, the board consents and the ledger tell the same story when an investor asks.