83(b) Election

An 83(b) election is a tax rule that allows employees to elect to include in their income the value of restricted stock or other property that is subject to substantial risk of forfeiture at the time of receipt. This election can be beneficial for employees because it allows them to take advantage of the lower capital gains tax rates when they sell the stock or other property in the future.

To make an 83(b) election, the employee must file a written statement with the IRS within 30 days of the date of receipt of the restricted stock or other property. The statement must include the following information:

* The name and address of the employee
* The date of receipt of the restricted stock or other property
* The fair market value of the restricted stock or other property at the time of receipt
* The name and address of the employer

If an employee makes an 83(b) election, the value of the restricted stock or other property will be included in their income for the year of receipt. However, the employee will not be taxed on any appreciation in the value of the stock or other property until they sell it.

There are a few things to keep in mind when making an 83(b) election. First, the election is irrevocable, so the employee cannot change their mind later. Second, the election only applies to restricted stock or other property that is subject to substantial risk of forfeiture. Third, the employee must have a reasonable basis for believing that the fair market value of the restricted stock or other property will increase in the future.

If an employee does not make an 83(b) election, the value of the restricted stock or other property will not be included in their income until they sell it. However, the employee will be taxed on any appreciation in the value of the stock or other property at the time of sale, even if the stock or other property is still subject to substantial risk of forfeiture.

The 83(b) election can be a complex tax rule, so it is important to consult with a tax advisor before making an election.