The 83(b) election is a one-page filing with a 30-day deadline and no extensions. Get it right and your equity is taxed as capital gain when you eventually sell. Miss it and you can owe hundreds of thousands of dollars in ordinary income tax on stock you cannot sell to pay the bill.
Quick Highlights
The deadline is 30 days after the date your stock is transferred, under Treasury Regulation 1.83-2(b). The transfer date is often the share issuance date, not your signature date.
Form 15620 is optional. The IRS form (revision April 2025) says its use is voluntary, and a written statement that meets the regulation still works.
Missing it is expensive: in the worked example below, roughly $1.6 million in tax owed in cash across four years, on stock that cannot be sold.
You no longer attach it to your tax return for property transferred on or after January 1, 2016, but you must still give a copy to your company.
What is an 83(b) election?
An 83(b) election is a written statement filed with the IRS that lets you be taxed on restricted stock when it is transferred to you, rather than as it vests. It must be filed no later than 30 days after the transfer date, under Treasury Regulation 1.83-2(b), and a copy goes to your company. For founders buying shares at a near-zero price, filing on time usually means little or no tax at grant and long-term capital gain treatment on later appreciation.
Best for founders forming a Delaware C-corp who want their company formed and a business account opened in the same flow, subject to approval: Rho. We assess formation options on price, what's included, and whether a business account can open in the same flow as formation.
What an 83(b) election does
When you receive stock that vests over time, the default tax rule is unkind. You are taxed as each tranche vests, on the difference between the fair market value at that moment and what you paid. Your company grows, your share price grows, and your tax bill grows with it, on stock you cannot sell.
An 83(b) election flips the timing. You elect to be taxed at the moment of transfer instead, when the stock is worth almost nothing.
In the IRS's own words, the election lets you "currently include in gross income the excess (if any) of the property's fair market value at the time of the transfer over the amount (if any) paid for the property at the time of transfer, rather than when the property later becomes substantially vested."
For a founder buying stock at $0.0001 per share on day one, that means paying tax on approximately nothing, and converting everything that follows into long-term capital gain.
To see whether your shares can qualify for the exclusion at exit, check our QSBS eligibility guide.
Who can file one
Founders with restricted stock subject to vesting. The core case.
Early exercisers of stock options. Exercising unvested options produces restricted stock, which is eligible.
Contractors and advisors receiving restricted equity.
Who cannot:
RSU holders. An RSU is a contractual promise, not a transfer of property. There is nothing to elect on, and filing has no legal effect.
Holders of fully vested stock. If it is not subject to a substantial risk of forfeiture, there is nothing to accelerate.
The 30-day deadline
The rule, verbatim from the IRS: an 83(b) election "must be filed no later than 30 days after the date the property was transferred."
Three things founders get wrong about this:
It runs from the transfer date, not your signature date. For founders this is often the share issuance date. If you sign a stock purchase agreement two weeks after the board approved the issuance, you have already burned half your window.
Thirty days means thirty calendar days. Not a month, and not thirty business days.
Treat the deadline as fixed. The regulation requires the election to be filed within 30 days of the transfer, and it applies to founders who are simultaneously incorporating a company, hiring, and raising money.
Revocation is nearly as unforgiving: under the same regulation, an election may not be revoked except with IRS consent.
How to file, as of 2026
You have two ways to make the election, and both are filed with the IRS office where you file your return.
Form 15620
The IRS publishes Form 15620, Section 83(b) Election. The current revision is April 2025.
Using it is optional. The form says it "is provided by the IRS for your convenience and its use is voluntary." A properly drafted election letter meeting the regulatory requirements remains valid.
Your two options
Method | How it works | Notes |
|---|---|---|
Mail Form 15620 | Print, sign, and mail to the IRS office where you file your return | Use Certified Mail with return receipt, and keep the receipt |
Mail a written statement | A statement meeting the regulatory requirements, same address | Still valid |
Two more requirements
Give a copy to your company. Still mandatory. The form's signature block commits you to providing a copy to the person for whom the services are performed. Your company needs it for its own records.
Do not attach it to your tax return. Under Treasury Regulation 1.83-2, that step no longer applies to property transferred on or after January 1, 2016. Many guides still tell you to attach it.
So: file within 30 days, send your company a copy, keep your proof. That is the whole obligation.
What missing it actually costs
Here is the arithmetic, using a founder with 1,000,000 shares purchased at $0.0001 per share ($100 total), vesting 25% per year over four years. Assume the share price grows to $0.50, $2.00, $5.00, and $10.00 at each vesting date, and the company eventually sells at $10.00 per share.
With a timely 83(b) election
Tax at grant: fair market value of $100 minus $100 paid equals $0 of income. No tax at grant, no tax at any vesting event.
At sale for $10,000,000:
```
Long-term capital gain $10,000,000 - $100 = $9,999,900
Tax at 20% = $1,999,980
Cash needed before the sale = $0
```
Without it
Ordinary income at each vesting date, at that date's value:
Vesting date | Shares | Price | Ordinary income |
|---|---|---|---|
Year 1 | 250,000 | $0.50 | $124,975 |
Year 2 | 250,000 | $2.00 | $499,975 |
Year 3 | 250,000 | $5.00 | $1,249,975 |
Year 4 | 250,000 | $10.00 | $2,499,975 |
Total | 1,000,000 | $4,374,900 |
At a 37% federal rate that is roughly $1,618,713 in ordinary income tax, due in cash across four years, on stock that cannot be sold. Payroll and state taxes come on top.
Your basis does increase, so the eventual capital gain shrinks:
```
Basis $100 + $4,374,900 = $4,375,000
Capital gain $10,000,000 - $4,375,000 = $5,625,000
Tax at 20% = $1,125,000
```
Side by side
With 83(b) | Without | |
|---|---|---|
Tax during vesting | $0 | ~$1,618,713 |
Tax at sale | $1,999,980 | $1,125,000 |
Total federal tax | ~$1,999,980 | ~$2,743,713 |
Cash owed before any liquidity | $0 | ~$1,618,713 |
About $744,000 more tax overall, but the number that actually destroys people is the second one. Owing $1.6 million in cash, years before any liquidity event, on an asset you are legally prohibited from selling.
The mistakes that cost the most
Missing the 30 days. A late election does not count.
Counting from the wrong date. The clock starts at transfer, not when you signed.
Filing for RSUs. Ineligible, and the filing does nothing.
Skipping the company copy. Still required.
Keeping no proof. Without a mailing receipt you cannot demonstrate timely filing years later, when diligence asks.
Attaching it to your 1040. Not required for property transferred on or after January 1, 2016.
Not thinking about forfeiture. If you leave before vesting, tax paid at grant on forfeited shares is generally not recoverable. With a near-zero grant value this is trivial; with a high grant value it is a real risk.
How incorporation services handle it
**Stripe Atlas** files 83(b) elections for all C-corp founders on accounts created after July 2024, by USPS Certified Mail within 10 business days of the share purchase, and the service is included in the initial Atlas incorporation fee. Stripe says founders who do not want an 83(b) election filed should not use Atlas to incorporate.
**Clerky** provides pre-filled 83(b) forms and an instructions document for stock subject to vesting issued on Clerky, and you mail the election yourself by USPS Certified Mail with Return Receipt, unless you use Clerky's add-on to file it through Clerky.
**Rho** includes 83(b) election support when you incorporate a Delaware C-corp. When you incorporate a Delaware C-corp with Rho, it costs $400: every formation document is reviewed by a licensed attorney, registered agent service is covered for your first year, your EIN application is filed for you, and 83(b) election support is included. C-corp filings take about 24 hours, starting the next business day after you submit, and your Rho business account opens in the same flow, subject to approval. To be eligible for the C-corp flow, you need at least one US-based owner or officer, a US operating address, and a business outside Rho's excluded industries. Rho also forms LLCs for $349 all in, state filing fee included. See how Rho Incorporation works.
Compare the full field in our guide to the best incorporation services for startups.
The one-line version
If you have restricted stock that vests, file the 83(b) within 30 days of the transfer date, send a copy to your company, and keep proof. It is some of the highest-value paperwork in startup formation.