What is 83(b) Election?
The tax election that lets you pay tax on restricted equity up front - before it appreciates.
83(b) Election: definition
When you receive restricted stock or early-exercise options subject to vesting, the default is to be taxed on the value as it vests - potentially a large bill if the stock has appreciated. An 83(b) election, filed with the IRS within 30 days of the grant/exercise, instead taxes you on the (usually tiny) value at grant. If the stock later soars, that appreciation is taxed as capital gains rather than ordinary income at each vesting.
- Must be filed with the IRS within 30 days of grant or early exercise - no extensions
- Pays tax on the grant-date value (often near zero for early founders)
- Starts the capital-gains holding clock at grant
- Risk: if the equity is forfeited or drops, tax paid is not recovered
How Fintra handles it
Fintra flags restricted-stock and early-exercise grants that are eligible for an 83(b) election and surfaces the 30-day deadline, so it is not missed - the most common and costly mistake. It records whether an election was made against the grant on the cap table, keeping equity and tax status together for future reporting.
Worked example
Frequently asked questions
Who should consider an 83(b) election?
Typically founders and very early employees who receive restricted stock or early-exercise options when the value is very low. Paying tax on a tiny grant value and starting the capital-gains clock can save substantial tax if the equity appreciates. It is a personal tax decision - consult an advisor.
What is the 83(b) deadline?
The election must be filed with the IRS within 30 days of the grant or early exercise, with no extensions. Missing it is irreversible and can be very costly, which is why Fintra surfaces the deadline for eligible grants.
What is the risk of filing an 83(b)?
If the equity is later forfeited (you leave before vesting) or the stock loses value, the tax you prepaid at grant is generally not recoverable. When the grant-date value is near zero, the risk is small; on higher-value grants it deserves careful thought.
Does Fintra track 83(b) elections?
Yes. Fintra flags eligible grants, highlights the 30-day deadline, and records whether an election was filed against each grant on the cap table, keeping equity and tax status together.
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