83(b) Election Calculator — Lifetime Tax Comparison

A Section 83(b) election is a one-time choice that lets you pay ordinary income tax on the bargain element of restricted property (RSA, early-exercised options) at the time of grant rather than at vest. The election fixes your basis at the grant-date FMV and shifts all future appreciation from ordinary income to capital gain. It must be filed with the IRS within 30 days of the grant (or early-exercise) date — the deadline is hard.

83(b) saves tax when (1) the bargain at grant is small or zero (e.g., FMV equals strike at very early-stage startup), (2) the stock appreciates significantly between grant and vest, and (3) you would otherwise face a large ordinary-income event at vest. The classic case: founder/early-employee receives an RSA at $0.001/share, files 83(b), recognizes near-zero income, and converts ten years of growth into long-term capital gain instead of ordinary income at vest.

Under IRC §83(b)(2) you must file the election with the IRS within 30 calendar days of the grant date (for restricted stock) or the early-exercise date (for options exercised before vest). The 30-day clock includes weekends and holidays. Mail by certified mail with return receipt to the IRS service center listed in the Form 83(b) instructions; keep the receipt indefinitely. Late filings are not accepted under any circumstances — the Tax Court has consistently rejected reliance on equitable tolling.

No. Standard time-vesting RSUs are not eligible for 83(b) because there is no transfer of property at grant — the unit is a contractual promise that converts to stock only at vest. 83(b) applies to restricted stock awards (RSAs, where the stock is transferred at grant subject to forfeiture) and to early-exercised options (where you actually exercise and receive stock before vesting). If your grant agreement says "restricted stock units" or "RSUs", 83(b) is not available.

If your company allows early exercise (vested or unvested) and the FMV equals the strike price at the time of early exercise, filing 83(b) within 30 days zeros the bargain element. For NSOs this means no W-2 ordinary income event at vest. For ISOs it means no AMT preference item at vest. All future appreciation is taxed as capital gain (long-term if held 1+ year from exercise). The risk is symmetric: if you forfeit unvested shares or the stock drops, the strike-price cash and any tax paid is not recoverable.

Two scenarios. (1) The stock drops below your basis: you've prepaid tax on value that no longer exists. The loss can be a capital loss only when you eventually sell, and capital losses offset only $3,000 of ordinary income per year (any excess carries forward). (2) You leave before vest and forfeit the shares: the tax paid under 83(b) is not recoverable as a deduction or refund. The IRS treats 83(b) as final once filed. The calculator above shows a break-even vest price; if you think the stock has any meaningful chance of finishing below that price, weigh the bet carefully.

Prepare a written statement (the IRS does not have an official form name, but they refer to it as a Form 83(b) statement). The statement must include your name, address, SSN, the description of the property (number of shares, class, company name, grant date), restrictions imposed (vesting schedule), FMV at grant, amount paid (the strike), the amount included in income (the bargain), and a sentence stating you elect under §83(b). Sign and date. Mail to the IRS Service Center where you file your tax return, by certified mail return receipt. Send a copy to your employer for their records. Keep the original certified-mail receipt indefinitely.