83b Election

Under the IRC (Internal Revenue Code), the 83(b) election is a provision that provides a startup founder or an employee the option to pay their taxes on the total FMV (fair market value) of the restricted stock at the time they are granted rather than its vests.

This is only applied to the equity subject to vesting. By choosing this, the IRS would know to tax the person for the ownership of the shares at the time they are granted, instead of when they are vested.

Within 30 days of the stock grant or early exercise, the 83(b) election must be filed with the IRS. The IRS provides Form 15620 for this purpose, but a self-prepared statement is also acceptable. Form 15620 is expected to make electronic filing available in the future, but the Eqvista platform simplifies the entire process, from generating the form to tracking your filing.

In essence, the 83(b) election is a pre-payment of your taxes on the shares that have a low valuation, assuming that the value of the equity would increase in the years that follow. Nonetheless, in case the value of the shares drop, then this tax strategy may create a loss for you, as you would have overpaid on taxes for shares of a much higher valuation.

Still not clear about the 83(b) election? Eqvista can help with you! Using Eqvista’s pre-filled 83(b) forms helps ensure that they are accurate and compliant with IRS requirements, reducing the risk of errors and ensuring timely submission.

Consulting with our expert ensures compliance with all requirements and assesses whether an 83(b) election is beneficial for your situation. By leveraging Eqvista’s services, you can efficiently manage the 83(b) election process, ensuring timely and accurate filings while benefiting from tax advantages associated with this election. Let Eqvista Handle Your 83(b) Elections Filing Efficiently! Contact us today