Filing an 83(b) election, and the thirty days that decide it

Two founders sign identical restricted stock purchase agreements on the same Tuesday. One files eleven days later and pays tax on a spread of about forty dollars. The other reads the paperwork in March and then recognises ordinary income every month for years, as the repurchase right lapses against a rising valuation. Nothing separates them but a date, and the date is not written on the certificate.

What the election changes, in one sentence of statute

The default rule in IRC § 83(a) is that property transferred for services is taxed when it becomes substantially vested — either transferable, or no longer subject to a substantial risk of forfeiture. Each time a tranche vests you recognise ordinary income equal to its value then, less whatever you paid. Section 83(b)(1) switches that off: you elect to include, in the year of transfer, the excess of fair market value at transfer over the amount paid. The statute then adds the sentence people skip: "If such election is made, subsection (a) shall not apply with respect to the transfer of such property, and if such property is subsequently forfeited, no deduction shall be allowed in respect of such forfeiture."

Thirty days from what, exactly

Section 83(b)(2) says the election "shall be made not later than 30 days after the date of such transfer". Not the grant. Not the vesting date. Not the day the signed documents reached your inbox. Transfer is defined at Treas. Reg. § 1.83-3(a)(1): it occurs "when a person acquires a beneficial ownership interest in such property", disregarding any restriction that will lapse. In practice, the day the purchase agreement takes effect and consideration passes — often earlier than the day you countersigned, and later than the resolution that authorised it.

One consequence trips up option holders. Treas. Reg. § 1.83-3(a)(2) states flatly that "the grant of an option to purchase certain property does not constitute a transfer of such property", and Publication 525 says the same in plain words: you cannot make this choice for a statutory or nonstatutory stock option. The election attaches to the shares — restricted stock issued outright, or the shares you receive when you early-exercise an unvested option — and the thirty days run from the day those shares become yours.

Why a late election cannot be rescued

Tax practice has a general relief valve for missed elections, in Treas. Reg. §§ 301.9100-1 to -3. It does not reach this one, and the reason is worth knowing rather than taking on faith. Section 301.9100-1(b) draws the line: a statutory election is one "whose due date is prescribed by statute", a regulatory election one whose due date comes from a regulation, ruling or notice. Section 301.9100-3 — the discretionary route, where a taxpayer shows good faith and no prejudice to the government — opens with its own scope limit: it applies to "regulatory elections". The automatic six months in § 301.9100-2(b) does cover statutory elections, but only those "whose due dates are the due date of the return or the due date of the return including extensions". Thirty days after a transfer is neither. It falls between the two doors.

What filing costs you, and when not to do it

The election is not free and it is not reversible. You recognise ordinary income now, in cash-payable tax, on shares that are illiquid, unvested and possibly worthless later. Treas. Reg. § 1.83-2(a) sets out what happens if they are forfeited while still substantially nonvested: the forfeiture is treated as a sale or exchange producing a loss equal to the excess of the amount paid for the property over the amount realised on the forfeiture — a capital loss, if the shares were a capital asset. The tax you paid on the spread is nowhere in that calculation.

Two situations deserve a plain answer rather than a hedge. If the shares were already vested when transferred to you — no repurchase right, no service condition, nothing that could take them back — then § 83(a) has already taxed them at transfer and the election changes nothing; there is no risk of forfeiture to elect out of. And an option you have not exercised gives you nothing to file on. Both still produce elections every year, from people who have read that filing is always the right move.

Form 15620, and what changed in 2025

For decades the election was a letter you wrote yourself, valid so long as it contained everything Treas. Reg. § 1.83-2(e) requires. That is still true. In November 2024 the IRS published Form 15620, now in its April 2025 revision, collecting the same information in numbered boxes. The form says its use is voluntary and that an election "may be made by filing a written statement that satisfies the requirements of Treas. Reg. § 1.83-2". Its value is that it removes the argument about whether your letter was complete.

In July 2025 the IRS opened online submission. You sign in to an IRS online account through its identity service, complete Form 15620 in the browser and submit it, receiving an immediate acknowledgement and a downloadable copy of what you filed. Paper still works: the form directs a mailed election to the IRS office where you file your federal income tax return, and Publication 525 points to the address for filers requesting a refund or not enclosing a payment. One quirk is worth knowing before you start typing — the online quantity field will not take an arbitrarily large share count, so some founder-scale grants still go by post.

The copy to the company is not a courtesy

Treas. Reg. § 1.83-2(d) requires the person who performed the services to submit a copy of the statement to the person for whom the services were performed, and a further copy to the transferee of the property where that is someone else. It is a condition of the election as drafted, not a nicety, and confirming that the copies went out is itself one of the required contents.

The company has its own stake in it. Under Treas. Reg. § 1.83-6(a)(1) the employer's deduction equals the amount included in the service provider's income under § 83, and § 1.83-6(a)(2) deems that amount included where the employer has timely satisfied its information-reporting obligations. A company that does not know an election was made cannot report the income, and cannot support the deduction mirroring it. It is also why the copy surfaces years later, when a buyer's counsel reconciles the cap table against the equity paperwork and finds an election nobody kept.

How people actually blow this

The rules are short. The failures are consistent, and none of them are exotic.

• Measuring from the wrong date. Counting from the board meeting, the offer letter, the day the PDF arrived, or the first vesting date. The clock runs from the transfer, and where those dates diverge the earliest defensible one is the safe assumption, not the most convenient.
• Assuming the company files it. It does not, and under Treas. Reg. § 1.83-2(c) it cannot: the election is filed by the person who performed the services, with the IRS office where that person files their own return. The company receives a copy. Waiting for someone in finance to handle it is waiting for something that was never on anyone's list.
• Filing twice. Submitting online and then posting a paper copy "to be safe" produces two elections for one transfer. The online process asks you to confirm you have not already mailed one, for exactly this reason.
• Electing on stock that needed no election. Fully vested shares are taxed at transfer under § 83(a) regardless, and an unexercised option is not property. Neither situation is improved by a filing.
• Losing the evidence. No copy, no certified-mail receipt, no confirmation. The election exists only as an assertion, and the person who has to prove it is you, five years later, in a data room.
• Not funding the tax. The income is recognised in the year of transfer whether or not anything is liquid. Where the spread is large, that is a real payment falling due on an ordinary filing deadline.

The parts that genuinely depend on your facts

Section 83(b) is a federal election. What your state does with the same income depends on its own conformity rules, and if you may move between transfer and vesting that needs someone who can see your whole position. The valuation behind the figure you report is a second such question: trivial at incorporation, not trivial by a priced round. Neither is a reason to delay the filing — the deadline does not wait for advice — but both are a reason to start the conversation in week one rather than week four.

The election is also only half a structure. It exists because the shares are restricted at all — a vesting design decision taken before the stock is issued and recorded in the purchase agreement and the shareholder documents around it. The election is downstream of all of it, and the only piece with a statutory clock.

Which is the shape of the whole thing. Nearly every hard question here — is the spread worth the cash, is the valuation defensible, will the shares vest — can be worked through calmly over several weeks by people who know the company. Exactly one cannot, and it is the trivial one: what date did the shares become yours, and is it still fewer than thirty days ago. Answer that on the day the paperwork lands, and everything else stays negotiable.