File your 83(b) election within 30 days
Founder stock almost always vests over time. Without an 83(b) election, each vesting date is a taxable event at that day's value. With one filed on time, you pay tax once, on today's near-zero value, and every dollar of growth after that is capital gain.
What the election does
Under IRC § 83, property you receive for services that is subject to a “substantial risk of forfeiture”, such as stock the company can buy back if you leave before vesting, is normally taxed when the restriction lapses. Section 83(b) lets you elect to be taxed at grant instead. You include the stock's fair value minus what you paid as ordinary income now, your capital-gain holding period starts now, and nothing is taxed as each tranche vests.
The filing
- Deadline: 30 calendar days from the grant (issuance) date, not the vesting start date or the date you signed a board consent. If day 30 falls on a weekend or federal holiday, it moves to the next business day. There are no extensions and no late-filing relief.
- File online or by mail: pick one. Since July 2025 the IRS accepts Form 15620 electronically through an IRS online account, and gives you a confirmation you can download. You can still mail Form 15620 or a statement with the required information to the IRS office where you file your return; use certified mail with return receipt and keep the receipt. Filing both ways can cause processing delays.
- Give the company a copy. It needs one for its records and for its own reporting.
- Keep your proof permanently. Acquirers and their lawyers ask for 83(b) evidence in due diligence. Since 2016 you no longer have to attach a copy to your tax return.
What goes on the form
- Your name, address, and taxpayer ID (SSN or ITIN).
- A description of the property, for example, 4,000,000 shares of common stock of Example, Inc., a Delaware corporation.
- The grant date and the tax year of the election.
- The restrictions (the vesting schedule and repurchase right).
- Fair market value at grant, the amount you paid, and the difference that is included in income.
Founders without an SSN or ITIN can still file; the election is valid, but apply for an ITIN promptly because you will need one to file the related return.
Worked math: 1,000,000 shares at $0.00001
A founder buys 1,000,000 restricted shares at the $0.00001 par value on formation day, paying $10, and files an 83(b) showing fair value of $10. Income recognized: $0, because the price paid equals fair value. All future appreciation is capital gain, long-term after one year. The costly version: the same founder never files, shares vest monthly over four years, and the company's value climbs to $5 per share. Each vesting tranche is ordinary income at that month's value: potentially millions taxed as wages, with no cash from a sale to pay the bill.
When not to file
If the stock is already worth a lot and you are paying less than fair value, the election means paying tax today on value you might never receive if you leave before vesting, and there is no refund if you forfeit. That trade-off is why early-stage founders file on day one, when the spread is zero, and why later employees often skip it. Stock options are different: an 83(b) applies only to early-exercised options or restricted stock, not to ordinary unexercised options.
Setting up the company? The Delaware C-corp guide covers where the 83(b) fits in the first 30 days.