Early exercise

In accounting, early exercise means exercising options before they vest, receiving restricted stockEquity & financingRestricted stockShares bought or received outright but subject to a vesting schedule: if the holder leaves early, the company may repurchase the unvested shares on the agreement's terms. Taxed under §83 as it vests, unless an 83(b) election is filed within 30 days the company may repurchase if the holder leaves. Paired with an 83(b) electionEquity & financing83(b) electionAn election, filed with the IRS within 30 days of receiving restricted stock, to be taxed on its value at grant rather than as it vests — at a founder's purchase price, usually no tax at all, and the capital gain holding period starts at once, the holding periods and the tax measurement start at exercise.