83(b) Election: 30-Day Deadline, Required Statement, and Permanence

To make a valid 83(b) election, you send the IRS a signed written statement within 30 days of the date the property was transferred to you, include the seven items required by Treasury Regulation 1.83-2, and give a copy to the person for whom you performed the services. Those are the filing requirements for an 83(b) election in full. Miss the 30-day window by a single day and the election is permanently lost, and once filed it is almost impossible to take back.¹

The 30-Day Deadline Is Absolute

The statement must reach the IRS no later than 30 days after the property transfer date. This deadline is statutory. There is no late-filing procedure, no extension request, and no relief for a good-faith effort that arrives on day 31.²

Two small mechanical points help. If day 30 falls on a Saturday, Sunday, or legal holiday, the deadline rolls to the next business day under IRC Section 7503, and the Form 15620 instructions confirm this.³ You can also file before the transfer date if you know it is imminent.¹

Proof of Mailing Matters

If the IRS later disputes whether the election was timely, your only defense is proof that it went out in time. Under IRC Section 7502, the postmark date on U.S. Postal Service mail is treated as the delivery date. Registered mail goes further: the registration is prima facie evidence of delivery, and the registration date counts as the postmark. Certified mail carries similar protection under IRS regulations, and the same rules apply to IRS-designated private delivery services such as certain FedEx and UPS options.⁴

Use certified or registered mail. Keep the receipt and any tracking confirmation permanently. The cost is trivial next to what it protects.

What the Statement Must Contain

Treasury Regulation 1.83-2(e) sets out exactly what the written statement must include. It must be signed and must indicate that it is being made under Section 83(b). Beyond that, seven items are required:¹

Your name, address, and taxpayer identification number.
A description of the property, such as 10,000 shares of common stock or a 5% profits interest in a partnership.
The transfer date and the taxable year for which you are making the election.
The nature of the restrictions — the vesting conditions or other terms that create the forfeiture risk.
The fair market value of the property at transfer, ignoring restrictions that will eventually lapse.
The amount you paid for the property, if anything.
A statement confirming that you provided copies of the election to the employer or other person for whom you performed services.

Form 15620 or a Custom Statement

The IRS released Form 15620 as a standardized template, but using it is voluntary. The form’s own instructions say you may instead file a written statement that satisfies the requirements of Treasury Regulation 1.83-2.³ Either approach produces a valid election as long as all seven items are present and the filing is timely. The form’s advantage is that it walks you through each entry, making it harder to leave something out. If you draft your own, check it against the regulation before mailing.

Where to Send It and Who Gets Copies

Mail the original signed statement to the IRS office where you file your federal income tax return.³ Provide a copy to the person or company for whom you performed the services, which is usually your employer. In the uncommon case where the service provider and the property recipient are different people, a copy also goes to the transferee.¹

You do not need to attach a copy of the election to your federal income tax return. That requirement was eliminated by Treasury Decision 9779, effective for property transferred on or after January 1, 2016.⁵ Keeping a copy with your tax records is still a sensible practice.

When the Election Is Available

The 83(b) election only matters when the property you received is still subject to a substantial risk of forfeiture, meaning your ownership is conditional on something like future service or hitting a performance target. Under Section 83, if you receive property for services and it could be taken back, you normally owe no tax on it until the forfeiture risk disappears. The election overrides that default and lets you pay tax immediately, on today’s value, instead of at each future vesting date.²

The most common scenario is a restricted stock award that vests over several years, where the employer can repurchase or reclaim unvested shares if you leave. Performance-based conditions also qualify — a founder whose shares are contingent on hitting revenue targets faces a substantial risk of forfeiture until those targets are met.⁶

Where the Election Does Not Apply

Section 83 has built-in exclusions. The election does not apply to stock options that lack a readily ascertainable fair market value, which describes most compensatory employee options. You cannot file an 83(b) election at the grant of a typical option; the election becomes relevant only if you early-exercise and receive shares that remain subject to vesting. Incentive stock options are separately excluded because ISO exercises are governed by Section 421. The election also does not cover property moved into or out of a qualified retirement plan under Section 401(a) or group-term life insurance taxed under Section 79.⁷

What Filing Changes at Tax Time

With a valid election, you recognize ordinary compensation income on the transfer date equal to the property’s fair market value minus what you paid. That amount is subject to income and employment taxes for the year of transfer, and your employer handles the reporting and withholding. After that, appreciation is no longer compensation. Your basis equals what you paid plus the amount included in income, and your capital gains holding period starts on the transfer date, so holding the property more than a year afterward qualifies a later sale for long-term capital gains rates.⁸

Without the election, Section 83(a) controls. You owe nothing at transfer, but each time a tranche vests you recognize ordinary compensation equal to the fair market value on the vesting date minus what you paid. On appreciating property, that number can be large, and all of it is taxed at ordinary rates. Your holding period for capital gains does not start until each vesting date.²

A Quick Numerical Comparison

Suppose you receive 10,000 restricted shares at $0.01 per share when the fair market value is $1.00. Four years later the shares vest at $10.00, and you sell immediately.

With the election, you include $9,900 in ordinary income in year one (10,000 × $1.00, minus $100 paid). Four years later you sell for $100,000. Your basis is $10,000, and the $90,000 gain is long-term capital gain because your holding period started at transfer.

Without the election, you owe nothing in year one. At vesting you recognize $99,900 in ordinary income (10,000 × $10.00, minus $100 paid). Selling immediately produces no additional gain, but the full $99,900 was taxed at ordinary rates rather than at long-term capital gains rates that top out at 20% plus the 3.8% net investment income tax for high earners.

The Election Is Effectively Permanent

An 83(b) election can be revoked only with the Commissioner’s consent, and consent is granted only when you were operating under a mistake of fact about the underlying transaction. A mistake about the property’s value does not count. A later decline in value does not count. Leaving the company and forfeiting the shares does not count. Any revocation request must be made within 60 days of discovering the mistake of fact.¹

If you file, pay the tax, and later forfeit the shares by leaving before vesting, you do not get to deduct the income you previously reported. The statute is explicit that no deduction is allowed for the forfeiture.² Your only recovery is a loss equal to what you paid minus anything received back on forfeiture, which for employees who paid pennies per share is negligible or zero.⁸

The election makes the most sense when the spread between fair market value and the price you paid is small at transfer, and you have high confidence in both future appreciation and staying long enough to vest. Early-stage startup stock with a low 409A valuation is the classic case. Filing on property that already carries significant value is a bigger gamble, because you are paying real tax today on income you might never keep.

1
eCFR. 26 CFR 1.83-2 – Election to Include in Gross Income in Year of Transfer
2
Office of the Law Revision Counsel. 26 U.S. Code 83 – Property Transferred in Connection With Performance of Services
3
Internal Revenue Service. Form 15620 – Section 83(b) Election
4
Office of the Law Revision Counsel. 26 U.S. Code 7502 – Timely Mailing Treated as Timely Filing and Paying
5
U.S. Government Publishing Office. Treasury Decision 9779 – Removal of Tax Return Requirement for Section 83(b) Elections
6
Internal Revenue Service. Revenue Ruling 2005-48
7
Office of the Law Revision Counsel. 26 USC 83 – Property Transferred in Connection With Performance of Services
8
eCFR. 26 CFR 1.83-2 – Election to Include in Gross Income in Year of Transfer