Vesting & grants
What is 83(b) Election?
A one-page IRS letter that elects to pay tax NOW on restricted stock - locking in tax basis at the (typically zero) value at grant.
An 83(b) election under Internal Revenue Code Section 83(b) lets a recipient of restricted stock (or early-exercised options) elect to be taxed on the spread (FMV - cost) at the moment of grant, rather than as the stock vests. For founder stock granted at par value, this means paying tax on essentially zero - and then converting all future appreciation into long-term capital gains. The election must be filed within 30 days of stock purchase. Missing this deadline is the most expensive paperwork mistake a founder can make.