The 83(b) election for founders: the 30-day deadline, how to file (now online), and what to keep

An 83(b) election lets a founder who receives stock that is still subject to vesting pay tax on its value when the stock is issued, instead of on its (hopefully much higher) value as each tranche vests. It must be filed with the IRS no later than 30 days after the stock is transferred to you, and the deadline is set by statute, so there is no extension. You can file by mailing a signed written statement or IRS Form 15620 to the IRS office where you file your return, or by completing Form 15620 online through an IRS Online Account. You must also give a copy to the company. Since 2016 you no longer attach a copy to your tax return, but you should keep proof of filing for as long as the shares' tax basis matters. If you pay full fair market value for the shares, the election reports $0 of income now and avoids being taxed on their value as they vest.

Below: what the election does, how to file it, what happens if you miss it, early-exercised options, and the company's bookkeeping entry. Every rule below is taken from the Internal Revenue Code, the Treasury regulations or IRS publications linked at the end. It's general information, not tax advice; confirm your situation with your CPA or attorney.

What is an 83(b) election?

Section 83 of the Internal Revenue Code governs property, including stock, transferred to someone in connection with the performance of services. Under the default rule in Section 83(a), if the stock is subject to a substantial risk of forfeiture, you aren't taxed when you receive it. Instead, you include in income its fair market value at the time it vests, minus anything you paid for it. IRS Publication 525 explains that a substantial risk of forfeiture generally exists when your rights in the property depend on your future performance of substantial services. A founder's standard reverse-vesting arrangement, where the company can repurchase unvested shares at the original price if the founder leaves, is the classic example.

Section 83(b)(1) lets you elect out of that default. You include the stock's value at the time of transfer, minus the amount you paid, in income for the year you receive it. Once you've made the election, Section 83(a) no longer applies to that stock, and later appreciation isn't taxed as compensation when the shares vest. Your tax basis becomes what you paid plus whatever you included in income (Publication 525), and your holding period starts just after the shares are transferred, not when they vest (Treas. Reg. § 1.83-4(a)).

Why do founders almost always file one?

Because the numbers usually favour it heavily. IRS Revenue Procedure 2012-29 gives an example that maps directly onto a founder: an employee of a private company buys 25,000 restricted shares for $25,000, which is their fair market value, subject to a two-year repurchase right.

• With an 83(b) election: the spread is $25,000 − $25,000 = $0, so the employee includes $0 in income in the year of purchase and nothing more when the shares vest. When the shares are later sold for $60,000, the entire $35,000 gain is capital gain.
• Without the election: the employee again includes $0 at purchase, but when the shares vest and are worth $40,000, the employee must include $15,000 of compensation income, even though nothing was sold and no cash was received. Only the remaining $20,000 is capital gain on the later sale.

For a founder the gap can be far larger: without an election, each tranche is taxed as compensation at its value on its vesting date, and if the company's value climbs after a financing, those dates can produce a tax bill with no cash to pay it.

The election isn't free of risk. If you pay less than fair market value, the difference is taxable compensation now. And if you include an amount in income and later forfeit the shares, Section 83(b)(1) says no deduction is allowed for the forfeiture. Publication 525 limits your loss to what you paid minus what you got back. Revenue Procedure 2012-29's sixth example shows an employee who reported $25,000 of income, then left before vesting and got no deduction or credit for the tax paid.

What is the deadline, and can it be extended?

Section 83(b)(2) says the election 'shall be made not later than 30 days after the date of such transfer.' The regulations add that it may also be filed before the transfer (Treas. Reg. § 1.83-2(b)). The clock runs from the date the shares are transferred to you (Treas. Reg. § 1.83-3(a) defines what counts as a transfer), so confirm that date with your lawyer when you sign, not when the paperwork is tidied up later.

Two rules can help at the edge:

• Weekends and holidays. The Form 15620 instructions apply Section 7503: if the 30th day falls on a Saturday, Sunday or legal holiday, the election is timely if it is postmarked by the next day that isn't.
• Postmark as filing date. Under Section 7502, a mailed document is treated as filed on its US postmark date. With certified mail, Treas. Reg. § 301.7502-1 treats the postmark on your sender's receipt as the postmark date and as prima facie evidence of delivery.

There is no extension. Under Treas. Reg. § 301.9100-1 this is a statutory election (its due date is set by statute). The IRS's discretionary late-election relief in § 301.9100-3 covers only regulatory elections, and the automatic extension for statutory elections in § 301.9100-2(b) applies only to elections due with a tax return.

How do you file an 83(b) election?

You have three routes. All of them must reach the IRS within the 30 days.

1. Form 15620 online. In 2025 the IRS released Form 15620, Section 83(b) Election (Rev. April 2025), a standard version of the statement. The IRS lists it on its Mobile-friendly forms page with 'Online Account required? Yes'. That page says that after filling in the form 'you will have the option to submit it online or download a copy for mailing,' and that 'the system will provide a success message and a link to download your form when it is submitted successfully.' Save both. The printed Form 15620 instructions still describe filing by mail; the online option comes through the Mobile-friendly forms system.

2. Form 15620 by mail. Print the PDF, complete and sign it, and mail it to the IRS office where you file your federal income tax return.

3. Your own written statement by mail. The Form 15620 instructions confirm that an election may instead be made with a written statement that satisfies Treas. Reg. § 1.83-2. We found no IRS-documented online route for a self-drafted statement, so mail it.

Where to mail it. Publication 525 (2025) says to mail the statement to the address listed for your state under 'Are requesting a refund or are not enclosing a check or money order' in Where Do You File? in the Form 1040 instructions. Send it certified mail and keep the postmarked receipt.

What must the election say?

Treas. Reg. § 1.83-2(e) requires the statement to be signed, to say it is made under Section 83(b), and to include:

1. Your name, address and taxpayer identification number.
2. A description of each property covered, such as '4,000,000 shares of common stock of Example, Inc.'
3. The date or dates of transfer and the taxable year for which the election is made.
4. The nature of the restrictions, such as the vesting schedule and repurchase right.
5. The fair market value at the time of transfer, determined without regard to lapse restrictions.
6. The amount you paid.
7. A statement that you have furnished copies to the required people.

Form 15620 has a box for each, plus Box 8 for the amount to include in income.

Who gets a copy, and what should you keep?

The company. Treas. Reg. § 1.83-2(d) requires you to give a copy to the person for whom you perform the services, which for a founder is the company. If someone other than you receives the stock, such as a trust, they get a copy too.

Your tax return: no longer. Until 2016 you also had to attach a copy to your income tax return for the year. Treasury Decision 9779 removed that requirement for property transferred on or after January 1, 2016, largely so taxpayers making the election could e-file their returns.

Your own records. The same Treasury Decision reminds taxpayers that 'a copy of any section 83(b) election made with respect to property must be kept until the period of limitations expires for any return with respect to which the income inclusion or basis of the property is relevant.' For founder stock, that means until the limitations period has run on the return that reports the sale. Keep together:

• The signed election, or the Form 15620 PDF downloaded after online submission.
• Proof of timely filing: the online success confirmation, or the postmarked certified mail receipt and any return receipt.
• Proof you gave the company a copy, and the stock purchase agreement.

Keep a copy in the company's records too, in case investors or an acquirer ask whether founders filed.

What happens if you miss the 30-day deadline?

Your stock falls back under the default rule in Section 83(a): as each tranche vests, you include its fair market value at that date, minus what you paid, as compensation income. There's no late-filing fix, for the reasons above, so talk to your tax adviser promptly. Your holding period for each tranche also starts only when it vests (Treas. Reg. § 1.83-4(a)).

Can you undo an election you did file? Only with IRS consent. Treas. Reg. § 1.83-2(f) limits consent to a mistake of fact about the underlying transaction, requested within 60 days of discovering it, and states that a mistake about the stock's value, or a later decline in value, doesn't qualify. The Form 15620 instructions point to Revenue Procedure 2006-31 for the procedure.

How does the 83(b) election work with early-exercised stock options?

You can't make an 83(b) election on an option itself. Publication 525 states that 'you can't make this choice for a statutory or nonstatutory stock option.' The election applies to stock.

Some option plans let employees early exercise: buy the shares before the options vest, with the unvested shares subject to the company's repurchase right. Treas. Reg. § 1.83-7(a) says that for an option without a readily ascertainable fair market value at grant, which describes options in almost every private startup, 'if the option is exercised, sections 83(a) and 83(b) apply to the transfer of property pursuant to such exercise.' Shares received on an early exercise that remain subject to a substantial risk of forfeiture are therefore restricted stock, and an 83(b) election can be filed within 30 days of the exercise date. If you exercise when the exercise price equals the stock's fair market value, the amount included is $0, as in the Revenue Procedure 2012-29 example. Incentive stock options also carry alternative minimum tax considerations that are beyond this article; ask your CPA before early-exercising ISOs.

How should the company record the founder stock purchase?

Suppose a founder buys 4,000,000 shares of common stock with a par value of $0.0001 at $0.0001 per share, which the board has determined is fair market value. The founder pays $400 into the company's bank account:

• Debit Cash $400
• Credit Common stock, at par $400

If the price per share were above par, say $0.001 per share ($4,000 in total), the excess over par would go to additional paid-in capital:

• Debit Cash $4,000
• Credit Common stock, at par $400
• Credit Additional paid-in capital $3,600

A few points that keep this clean:

• Record the actual payment. Shares recorded as paid with no cash trail are hard to support later.
• Price equals value, or there's compensation. Under Treas. Reg. § 1.83-6(a), the company's deduction equals what the founder includes as compensation, so at full fair market value both are $0. If the price is below fair market value, work out the reporting with your CPA before the shares are issued.
• Check your authorized shares. Delaware's franchise tax notice starts from them. See our guide to the Assumed Par Value Capital method, which uses issued shares and gross assets.
• Keep the paper together. Board consent, stock purchase agreement, payment record and each founder's 83(b) proof belong in the same place.

How ClearBooks helps

ClearBooks records the founder stock purchase like any other entry: post the cash and the common stock or paid-in capital lines as a transaction or journal entry in the ledger. Separately, the cap table can record each stockholder's shares issued, price per share and a link to the signed agreement. The cap table doesn't post journal entries automatically or track vesting schedules. ClearBooks does not prepare or file 83(b) elections. You can keep the purchase agreements and filed elections in an investor data room to share with investors or an acquirer during diligence. If you raised on SAFEs alongside founder stock, see how to account for a SAFE. Plans and pricing are on the pricing page.

This article is general information, not tax or legal advice. Confirm your situation with your CPA or attorney before you file.

Sources

• 26 U.S.C. § 83, Property transferred in connection with performance of services (default rule, election, 30-day deadline, no deduction on forfeiture)
• 26 CFR § 1.83-2, Election to include in gross income in year of transfer (timing, manner, copies, required contents, revocation)
• 26 CFR § 1.83-4, Special rules (holding period); § 1.83-6, Deduction by employer; § 1.83-7, Taxation of nonqualified stock options
• IRS, Form 15620, Section 83(b) Election (Rev. 4-2025) and instructions
• IRS, Mobile-friendly forms (Form 15620 listed with Online Account required; submit online or download for mailing)
• IRS, Publication 525 (2025), Taxable and Nontaxable Income, Restricted Property, and the update on how to make the 83(b) choice
• IRS, Revenue Procedure 2012-29 (worked examples)
• Treasury Decision 9779, 81 FR 48707 (July 26, 2016) (removed the attach-to-return requirement; record retention)
• 26 CFR § 301.9100-1, § 301.9100-2 and § 301.9100-3 (late-election relief and its limits)
• 26 U.S.C. § 7502 and 26 CFR § 301.7502-1 (timely mailing; certified mail)