The 83(b) Election on Restricted Stock

If you've been offered early exercise on a stock option grant, or you've received restricted stock directly from an early-stage company, you may have a narrow window to make an election that changes how, and when, that equity gets taxed. The 83(b) election lets you choose to be taxed now, while the value is small, instead of later as your restrictions lapse and the stock is presumably worth more. This article covers what the election actually does, the strict deadline for filing it, when it tends to be a good idea, and how to file it correctly.

What does an 83(b) election actually do?

Restricted stock and early-exercised options share a common tax problem: without any election, you are not taxed when you receive the property, but later, as the restrictions lapse — typically as it vests — with the taxable amount measured by the stock's value at each lapse date, not its value when you first received it. If the company's value climbs between the grant and the vesting dates, that default rule means you get taxed on a much larger, still-mostly-paper gain, spread across every vesting date, using ordinary income rates each time. An 83(b) election changes the timing entirely: it lets you choose, within a strict deadline, to be taxed on the full value of the property now, at transfer, rather than later as it vests. Filed early enough, typically when the spread between what you paid and the stock's current value is small or zero, the ordinary income you report at filing is small or nothing, and every dollar of appreciation after that point is treated as capital gain rather than compensation income when you eventually sell, with the holding period for long-term treatment starting just after the date the shares were transferred to you rather than on each later vesting date. The trade is straightforward in concept: pay a small, known amount of tax now in exchange for capital-gains treatment on everything that happens afterward — but as the rest of this article covers, that trade only works out if a few other things go right.

When does the 30-day clock start and end?

The 83(b) election has one deadline, and it is unforgiving: the election must be filed with the IRS within 30 days of the date the property was transferred to you, counted in calendar days, not business days — the one narrow exception is that if the 30th day itself falls on a Saturday, Sunday, or legal holiday, the deadline shifts to the next business day (26 U.S.C. §7503) — missing it by even a single day beyond that means the election is invalid and the default vesting-date tax rules apply instead. For restricted stock granted outright, the transfer date is straightforward: the day the company issued the shares to you. For an early-exercised option, the transfer happens on the date you actually exercise and pay for the shares, not on the earlier date the option itself was granted — exercising early is exactly what creates the restricted property an 83(b) election can apply to in the first place, so the 30-day clock starts running the moment you exercise, and nowhere before that. Because the deadline is measured in calendar days from a specific event you control, it is entirely possible to miss it simply by not knowing the clock has started, especially with an early exercise that happens outside your company's normal grant paperwork and timeline. Anyone considering early exercise specifically to make an 83(b) election worthwhile should have the election paperwork ready before exercising, not after, so there is no gap between the transfer and the filing.

When is an 83(b) election a good idea?

An 83(b) election tends to make sense when three things are true at once: the spread between what you paid for the property and its value at transfer is small, so the ordinary income you report at filing is small or zero; you actually intend to hold the shares through vesting rather than leaving the company or selling early; and you can afford to pay whatever tax the election does create without it changing your financial picture in a meaningful way. When all three hold, the election is close to a one-sided bet — a small, known cost today against the possibility of converting a large future gain from ordinary income into capital gain. The election backfires in a few specific situations, each worth naming plainly. If the company fails or the stock ends up worthless, you have already paid tax on value that never materialized, and that tax is not refundable — the IRS does not give the money back because the bet didn't pay off. If you leave the company, or are terminated, before the restrictions lapse, you typically forfeit the unvested shares back to the company, but you do not get back the tax you already paid on them at the election. And if the spread at transfer was larger than expected, because the company's valuation moved between the offer and the actual transfer date, the ordinary income due at filing can end up being a real, unwelcome cash cost rather than the near-zero amount the strategy is usually pitched around. None of these outcomes are unusual for an early-stage company specifically, which is exactly where 83(b) elections come up most often.

How do I file it and what do I keep?

Filing an 83(b) election means sending a statement to the IRS service center where you file your tax return, within the 30-day window described above — no form is required: you may use the IRS's own standardized Form 15620, or a self-drafted written statement instead, as long as it contains specific required information: your name, address, and taxpayer ID; a description of the property and the date it was transferred; the taxable year for which the election is made; the restrictions that apply to it; its fair market value at transfer; what you paid for it, if anything; and a statement that copies were provided as required. You must also give a copy of the same statement to the company that transferred you the property, and it is worth keeping a copy for your own records permanently, not just until your next tax return is filed, since you will need to reference the election's terms again when you eventually sell the shares. Because the deadline is strict and unforgiving, mail the election by certified mail with a return receipt, or another method that gives you dated proof the IRS received it by day 30, rather than relying on a postmark alone; if the IRS ever questions whether the election was filed on time, the burden of proving it falls on you, and "I mailed it" without proof is a much weaker position than a certified-mail receipt with a legible date on it.

Does an 83(b) election apply to my RSUs?

No. An 83(b) election only applies to property that has actually been transferred to you subject to a risk of forfeiture — restricted stock you already hold, or shares you've received through an early-exercised option. An RSU is different in a way that matters here: it is an unfunded promise to deliver shares in the future, not property you already hold, so there is nothing yet to make an election on. You cannot file an 83(b) election on an RSU grant, no matter how early you'd like to lock in today's low valuation, because until the RSU actually vests and shares are delivered to you, there is no transferred property for the election to apply to. If you hold RSUs and are wondering whether an 83(b) election could help you the way it might help restricted stock, the honest answer is that the two instruments are not eligible for the same tool — the RSU's own tax treatment at vest, covered elsewhere, is not something an election can move earlier.

Key numbers (2026)

• 83(b) election deadline — must be filed within 30 calendar days of the transfer of the property, with no extensions (IRC §83(b)(2); Treas. Reg. §1.83-2(b)).
• Revocability — once filed, an 83(b) election cannot be revoked without the consent of the IRS (Treas. Reg. §1.83-2(f)).
• Required contents of the election — the statement must identify the property, the transfer date and taxable year, its fair market value, what you paid, and the restrictions on it, with a copy delivered to the company (Treas. Reg. §1.83-2(e)).

Current as of 2026-09

Sources

• Internal Revenue Code §83 — https://www.law.cornell.edu/uscode/text/26/83
• Internal Revenue Code §7503 — https://www.law.cornell.edu/uscode/text/26/7503
• Treasury Regulation §1.83-2 — https://www.law.cornell.edu/cfr/text/26/1.83-2
• Treasury Regulation §1.83-3 — https://www.law.cornell.edu/cfr/text/26/1.83-3
• Treasury Regulation §1.83-4 — https://www.law.cornell.edu/cfr/text/26/1.83-4
• Revenue Procedure 2012-29 — https://www.irs.gov/pub/irs-drop/rp-12-29.pdf
• IRS Form 15620, Section 83(b) Election (rev. April 2025) — https://www.irs.gov/pub/irs-pdf/f15620.pdf
• IRS Publication 525, Taxable and Nontaxable Income — https://www.irs.gov/publications/p525

Sample content for demonstration purposes — not financial advice.