Meaning
Statutory deadline for filing a tax notice with the Internal Revenue Service after receiving restricted property. The 83b election timing requires a taxpayer to file within thirty days of the stock grant date to lock in the valuation for tax purposes. The window is absolute and no late filings are accepted under standard procedures.
It shifts the tax event from the future vesting date to the present acquisition date.
Filing Window
Compliance requires a physical mailing to the specific regional office where the individual files their return. Missing the 83b election timing causes the difference between the grant price and the fair market value at each vesting event to be treated as ordinary income. Proof of delivery via certified mail is the only record that protects against a lost document claim.
Tax Exposure
Valuation at the moment of grant is often negligible for new entities. If the 83b election timing is met, the holder pays tax on that low value and stops future ordinary income tax on those specific shares. Failure to file means tax is calculated when the shares vest, likely at a much higher valuation.
Irreversible Default
Forgetting the deadline creates a permanent record of tax liability that cannot be cleared by backdating. The 83b election timing dictates whether a founder pays capital gains later or ordinary income now. This choice defines the long term cost of ownership.
