# The 83(b) election, step by step

> Thirty days from the transfer, by mail or online, with a copy to the company: what the 83(b) election saves a founder, and how to file it.

Source: https://lopifi.com/learn/founder-stock-and-vesting/83b-election
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

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**How do I file an 83(b) election, and what happens if I miss the deadline?** Thirty days from the transfer, by mail or online, with a copy to the company: what the 83(b) election saves a founder, and how to file it.

Each founder bought 4,000,000 shares of [restricted stock](https://lopifi.com/md/glossary/restricted-stock) on September 1, 2026. Without an election, [section 83](https://lopifi.com/md/glossary/83-b-election) taxes the stock as it [vests](https://lopifi.com/md/glossary/vesting): every vesting date is income equal to that day's value of the shares vesting, less what was paid for them. The [83(b) election](https://lopifi.com/md/glossary/83-b-election) moves the whole measurement to the day of purchase — when the stock is worth exactly what the founders paid, so the income is zero.

> “shall be made not later than 30 days after the date of such transfer.”

— [26 U.S.C. §83(b)(2)](https://www.law.cornell.edu/uscode/text/26/83), Property transferred for services, and the 83(b) election's 30 days

|  | Taxed when | Income |
| --- | --- | --- |
| 83(b) filed | September 1, 2026, at purchase | $0 |
| No election — the cliff | September 1, 2027 | $52,500 |
| No election — each month after | Every month to the last | $4,374.98 |

One founder's block, with and without the election. The later value per share is the $0.06 409A appraisal Northwind gets in November — illustrative, because nobody knows what the stock will be worth at the cliff.

> **Thirty days, from the day the stock is transferred — for Northwind's founders, October 1, 2026. There is no late filing.**

- **September 1, 2026** — Stock purchased and transferred; the 30 days start
- **October 1, 2026** — Day 30: the last day to file the election (Form 15620)
- **Same day** — A copy to Northwind, and one kept with the founder's own records

Computed by the same function the compliance calendar uses, so the two tracks give the same date.

1. **Fill in Form 15620 or write the statement.** Form 15620, or a written statement that meets Treas. Reg. §1.83-2. Either must give your name, address and TIN, describe the property, state the transfer date and the tax year, the restrictions, the fair market value at transfer and what you paid, and say a copy went to the company.
2. **Mail it or submit it online within 30 days.** Either mail it, as the form's instructions say, to the IRS office where you file your federal income tax return — or, since the IRS lists Form 15620 among its mobile-friendly forms, submit it online through an IRS Online Account. Use one method, not both, and keep proof of the date: the postmark or the online confirmation.
3. **Give the company a copy.** The regulation requires a copy to the person you perform services for — here, Northwind — and to the transferee if that is someone else.
4. **Keep the proof forever.** The election cannot be revoked without the IRS's consent. Keep the signed copy and the proof of filing — the postmark or the online confirmation — with the stock purchase agreement; a diligence team will ask for both.

How to file an 83(b) election

> “Submit this completed and signed Form 15620 to the IRS via mail with the IRS office with which the person who performs the services files a federal income tax return.”

— [Form 15620 (Rev. 4-2025), Instructions — Where to File](https://www.irs.gov/pub/irs-pdf/f15620.pdf) (PDF), Section 83(b) Election (PDF) — where to send it, and the copies

> “After filling in the form, you will have the option to submit it online or download a copy for mailing … An IRS Online Account (OLA) is required to complete mobile friendly forms that require signatures.”

— [IRS, Mobile-friendly forms (list, page 3: Form 15620, Online Account required)](https://www.irs.gov/forms-pubs/mobile-friendly-forms?page=3), Form 15620 can be submitted online through an IRS Online Account

> “You can make the choice by filing a written statement or Form 15620, with the Internal Revenue Service Center where you file your return. You must file this statement no later than 30 days after the date the property was transferred.”

— [IRS Pub. 525 (2025), Restricted Property — How to make the choice](https://www.irs.gov/publications/p525), Making the 83(b) election: a written statement or Form 15620

> “shall be filed not later than 30 days after the date the property was transferred”

— [Treas. Reg. §1.83-2(b)–(e)](https://www.law.cornell.edu/cfr/text/26/1.83-2), How an 83(b) election is made, who gets a copy, and what it must say

*[Figure: vesting]*

Each founder's 4,000,000 shares with the 83(b) plate: the election taxes them at today's value instead of at each vesting date.

> **What the election cannot do.** IRS Publication 525 is explicit: you can't make the election for a statutory or nonstatutory stock option. It applies to property — shares — so an employee who wants it must first exercise, which is what early exercise is for.

**Wrong:** "We'll do it with the tax return": $52,500 of ordinary income at the cliff, then more every month.

**Right:** Filed by October 1, 2026: $0 of income now, a capital gain holding period that starts at purchase.

The election is a bet that the value will rise. If the stock is forfeited later, §83(b)(1) allows no deduction for the forfeiture — at a founder's price the bet costs nothing, which is why founders almost always file.

## Where this page's rules come from

- [26 U.S.C. §83(b)(2)](https://www.law.cornell.edu/uscode/text/26/83) — Property transferred for services, and the 83(b) election's 30 days (statute)
- [Treas. Reg. §1.83-2(b)–(e)](https://www.law.cornell.edu/cfr/text/26/1.83-2) — How an 83(b) election is made, who gets a copy, and what it must say (regulation)
- [Form 15620 (Rev. 4-2025), Instructions — Where to File](https://www.irs.gov/pub/irs-pdf/f15620.pdf) (PDF) — Section 83(b) Election (PDF) — where to send it, and the copies (form)
- [IRS, Mobile-friendly forms (list, page 3: Form 15620, Online Account required)](https://www.irs.gov/forms-pubs/mobile-friendly-forms?page=3) — Form 15620 can be submitted online through an IRS Online Account (irs)
- [IRS Pub. 525 (2025), Restricted Property — How to make the choice](https://www.irs.gov/publications/p525) — Making the 83(b) election: a written statement or Form 15620 (irs)
- [Form 15620 (Rev. 4-2025), Instructions — When to File](https://www.irs.gov/pub/irs-pdf/f15620.pdf) (PDF) — Section 83(b) Election (PDF) (form)

## Read further

- https://lopifi.com/md/startups/stock-options-409a-and-vesting
- https://lopifi.com/md/accounting/83b-election

- **Track:** [Cap tables & raising](https://lopifi.com/md/learn/equity)
- **Part of:** [Founder stock, vesting and the 83(b) election](https://lopifi.com/md/learn/founder-stock-and-vesting) — 7 min
- **Terms taught:** [83(b) election](https://lopifi.com/md/glossary/83-b-election), [Restricted stock](https://lopifi.com/md/glossary/restricted-stock), [Vesting](https://lopifi.com/md/glossary/vesting)
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