83(b) Election

A US tax filing that founders with vesting shares must make within 30 days of the grant.

Also known as: 83(b) election, 83b, 83b election

The 83(b) election lets US founders (and early employees) pay tax on restricted stock at grant — when value is near zero — instead of as it vests, when (hopefully) it is worth far more. Without it, each vesting tranche is taxed as income at then-current value: a tax bill that grows precisely as the company succeeds. The election must be filed within 30 days of the grant — no extensions, no excuses accepted.

with 83(b):   tax on ~$0 value at grant → later gains are capital gains
without:      tax as ordinary income on value at each vesting date (potentially huge)

It applies to actual stock grants (common/common restricted), not options — options have their own timing (exercise). File by certified mail, keep proof forever, confirm the IRS received it. And every founder files individually: one founder’s election covers nobody else.

The classic mistakes:

Missing the 30-day window. The single most expensive paperwork miss in startups — irrevocable, no relief, discovered years later at exit when the tax bill lands. File within days of the grant, not near day 30.
Assuming it applies everywhere. This is US federal tax mechanics. Founders in Indonesia, Singapore or elsewhere need local equivalents analysis (often: different timing, different elections) — ask local counsel, do not import US forms.
Filing without understanding. 83(b) can backfire if shares become worthless (tax paid on value that vanished, generally unrecoverable). With proper advice it is usually right for founders; understand the downside case first.
No proof of filing. “We mailed it” without certified receipts or IRS confirmation. Keep copies, mailing proofs and confirmations with corporate records permanently.

On every US stock grant: file within 30 days, keep proof, confirm receipt. Put it on the formation checklist beside the grant itself — see vesting for what is vesting and why.