What is 83(b) Election? Definition, requirements, and how it applies to your business formation. Learn everything about 83(b) election for LLCs and corporations.
# 83(b) Election
An 83(b) election is a filing with the IRS that allows a taxpayer to pay income tax on the fair market value of restricted stock at the time of grant, rather than when the stock vests. This is critical for startup founders who receive stock subject to vesting — by filing early (when stock value is low), they can convert future gains from ordinary income to long-term capital gains.
The 83(b) election must be filed with the IRS within 30 days of receiving the restricted stock — there are no extensions and no exceptions. Missing this deadline can cost founders hundreds of thousands or millions in additional taxes if the company's value increases significantly.
Lovie's formation flow for C-Corp founders includes 83(b) election preparation and filing reminders, ensuring the 30-day deadline is never missed.