Also known as Section 83(b) election, Form 15620 election
An 83(b) election tells the IRS to tax restricted stock at its (usually tiny) value on the grant date rather than as it vests.
Key takeaways
An 83(b) election tells the IRS to tax restricted stock at its (usually tiny) value on the grant date rather than as it vests. Founders and early employees must file within 30 days of the grant or early exercise, a strict deadline with no extensions, to lock in a low tax basis and start the capital-gains and QSBS holding clocks.
A founder receives 8,000,000 shares of restricted stock at $0.0001 par value, worth $800 total. Filing an 83(b) within 30 days, she pays tax on just $800 today. Without it, she'd owe ordinary income tax as shares vest, potentially on hundreds of thousands of dollars once the stock appreciates, at ordinary rates instead of capital gains.
The election must be filed with the IRS within 30 days of the transfer/grant, the deadline is strict with no extensions or hardship relief. The IRS released standardized Form 15620 in November 2024 (later revised April 2025) to make the election, though a custom written statement is still permitted.
Source: IRC Sec. 83(b); IRS Form 15620 (2025) (2026)
For founders holding stock subject to vesting, a missed 83(b) can create a large, recurring ordinary-income tax bill as shares vest and appreciate, plus it delays the clock for long-term capital gains and QSBS treatment. Filing on time is one of the cheapest, highest-leverage tax moves a startup founder makes, and the 30-day window is unforgiving.