Section 83(b) Election FAQ
Last verified Oct 7, 2026 · Reviewed by Value8 valuation team
Common questions about how a US Section 83(b) election works. This is general information, not legal or tax advice. Confirm the specifics for your situation with your tax advisor.
What is a Section 83(b) election?
A Section 83(b) election is a US federal tax election under Internal Revenue Code Section 83(b) that lets a holder of unvested restricted stock pay ordinary income tax on it once, at the time of transfer, instead of as it vests over time.
Who can file a Section 83(b) election?
Anyone who receives restricted stock in connection with services, such as a founder or early employee issued stock that vests over time, or an employee who early-exercises an option into unvested shares. The taxpayer files it, not the company.
Does a Section 83(b) election apply to stock options?
No. The election applies to actual shares that are still subject to a substantial risk of forfeiture. An unexercised stock option has not yet transferred any property, so there is nothing to elect over until the option is exercised.
What is the Section 83(b) 30-day deadline?
The election must be filed with the IRS within 30 days of the date the restricted stock was transferred to the holder. It is a relative deadline measured from the transfer, not a fixed calendar date.
When does the 30-day window start?
It starts on the date the holder actually receives beneficial ownership of the stock, the transfer date, not the date the board approved the grant and not any later vesting date.
Can a missed Section 83(b) deadline be fixed?
Generally no. The extension relief available for many other tax elections does not apply to a Section 83(b) election, so once the 30-day window closes, the opportunity to make the election for that transfer is gone.
What happens if I don't file a Section 83(b) election?
The default rule applies instead: ordinary income is recognized as the stock vests, measured as the fair market value of each newly vested tranche minus the amount paid, at the time it vests rather than at grant.
How does a Section 83(b) election change how restricted stock is taxed?
It moves the measurement of ordinary income from each future vesting date to the single transfer date, taxing the spread between fair market value at transfer and the amount paid once, up front, instead of taxing the (often larger) spread at each vesting date later.
Why is the ordinary income often close to zero with an early 83(b) election?
Because early-stage restricted stock is typically priced at or near its fair market value on the grant date, the spread the election taxes at transfer is small. Without the election, the spread taxed at each later vesting date can be much larger if the company's value has grown in the meantime.
When does the capital-gains holding period start with a Section 83(b) election?
It starts on the transfer date, the grant date, for the whole award. Without the election, each vesting tranche starts its own holding period only once it vests.
What is the risk of filing a Section 83(b) election?
The holder pays ordinary income tax up front on stock that is not yet vested and may never vest. If the stock is later forfeited, for example because the holder leaves before vesting completes, or turns out to be worth less, the tax already paid is generally not recovered.
What has to be included in a Section 83(b) election?
Typically the company's name and address, a description of the property transferred, the date of transfer, the taxable year, the fair market value of the property at transfer, and the amount paid for it, along with the taxpayer's signature.
Where do I file a Section 83(b) election?
It is filed with the IRS within the 30-day window from the transfer date. Taxpayers commonly keep a signed copy for their own records and provide a copy to the company as well.
What is the relationship between a 409A valuation and a Section 83(b) election?
A 409A valuation is what establishes the defensible fair market value of a private company's stock at grant. That same value is the figure a Section 83(b) election compares against the amount paid to calculate the ordinary income recognized at transfer.
Is a Section 83(b) election the same as Israel's Section 102?
No. A Section 83(b) election is a US federal income tax election. Israeli employee equity is taxed under a separate framework, Section 102, with its own tracks, trustee requirements, and deadlines.
Does Value8 support Section 83(b) elections?
Yes. Value8's cap table platform ties Section 83(b) election tracking to the underlying grant or stock certificate it was transferred from. See how Value8 does Section 83(b) for details.
This is general information about how a Section 83(b) election works, not legal or tax advice. Confirm the exact rules, deadlines, and consequences that apply to you with your tax advisor.