An 83(b) election tells the IRS to measure compensation income on restricted stock when the stock is transferred to you, rather than as it vests. The amount is the stock’s fair market value at transfer minus what you paid. For founder stock purchased at fair market value, that amount can be zero.
You must file within 30 days after the property is transferred. This is a mandatory deadline, with no routine extension for missing it. The narrow weekend, holiday, and statutory postponement rules are discussed below.
Updated September 8, 2026.
Start with the action you need
- File online or by mail
- Check the transfer date and deadline
- Decide whether an election fits your grant
- Understand early exercise, ISOs, and NSOs
- Understand QSBS holding periods
- Review Washington tax implications
How to file Form 15620
You can use the IRS’s online Form 15620 or paper Form 15620. A properly drafted written election satisfying Treasury Regulation Section 1.83-2 is another permitted route. The official form is convenient, but its use is voluntary.
Filing online
- Gather the facts. Confirm the service provider’s taxpayer information, the property and quantity, transfer date, taxable year, restrictions, fair market value, and price paid. Do not substitute the date paperwork reached your inbox for the actual transfer date.
- Open the IRS form and sign in. The electronic route uses the taxpayer’s IRS Online Account. Set up and verify access well before the deadline. An advisor can help prepare the information; the taxpayer should review and complete the submission through the appropriate account.
- Review the completed election before submitting. Confirm the number of shares and all dollar amounts. Use the portal’s current instructions and limits. A calculation that looks small per share may be substantial across a large founder grant.
- Submit and retain evidence. Save the successful-submission confirmation and the completed election. Downloading a form without submitting it is not an electronic filing.
- Deliver the required copies. Give a copy to the person for whom the services are performed. If the service provider and the property transferee differ, give the transferee a copy too. In the typical direct company grant, give the company its copy and retain one yourself.
The IRS’s mobile-friendly forms guidance describes account access, successful-submission messages, and downloading the completed form.
Filing by mail
Complete and sign Form 15620 or a compliant written election, then mail it to the IRS office specified by the applicable filing instructions. Form 15620 directs the service provider to the IRS office where that person files a federal income-tax return. Confirm the current address; do not assume the company’s address determines it.
For paper filing, use a method that establishes timely mailing under Section 7502. A practical approach is USPS Certified Mail obtained at a retail counter, with a properly dated receipt retained alongside the signed election and a record of the destination address. A return receipt provides additional delivery evidence. Merely placing an envelope in a collection box does not establish a same-day postmark.
Mailing is not the only permitted alternative to the portal: qualifying registered mail and designated private-delivery services have their own Section 7502 rules. If using a private carrier, confirm both the designated service and the correct IRS street address. Do not assume every overnight product qualifies.
Choose the filing route before the deadline
Use one submission route and keep proof. Do not routinely submit duplicate paper and electronic elections. If a submission fails or its status is uncertain near the deadline, get prompt advice on completing a timely, documented election.
The April 2025 Form 15620 has one taxpayer signature line. Joint ownership, community property, or a different transferee may require more careful drafting. Resolve those facts with counsel before filing; do not improvise an additional signature or assume every ownership structure fits the standard form.
Permanent records: retain the signed or submitted election, submission or mailing evidence, transfer documents, support for value and price, and evidence that the required copies were delivered.
Download the 83(b) election filing checklist (PDF) to track these steps from transfer date through copy delivery.
The transfer date and the 30-day deadline
The clock begins when the property is transferred. Under Treasury Regulation Section 1.83-3(a), the question is when you acquire a beneficial ownership interest. Board approval, the stock agreement, payment, and applicable issuance conditions help establish that date.
A board resolution alone does not always complete the transfer. Neither does the later arrival of a certificate or cap-table entry necessarily set the date. Confirm the actual facts with company counsel and resolve ambiguity promptly.
The 30-day deadline is statutory. There is no routine extension or general IRS discretion to excuse a late election. If day 30 falls on a Saturday, Sunday, or legal holiday, Section 7503 applies, as the Form 15620 instructions explain. That timing rule does not make the deadline discretionary.
If the apparent deadline has passed, first confirm the transfer date and whether a statutory postponement applies. Revenue Procedure 2018-58, Section 8, item 5, lists 83(b) elections among acts eligible for postponement; it does not itself grant relief. An applicable IRS disaster notice must cover the taxpayer and the deadline.
If no timely election was made and no postponement applies, restricted stock generally remains subject to the default Section 83 rules. A replacement grant or other restructuring is not an automatic cure. Obtain advice about the actual grant rather than assuming the IRS can excuse a late election.
What happens without the election?
Section 83 governs property transferred in connection with services. For substantially nonvested stock, ordinary compensation income generally arises when it first becomes transferable or ceases to be subject to a substantial risk of forfeiture. In a typical startup vesting arrangement, that means taxation as each tranche vests.
The income is generally fair market value at that time minus what you paid for the shares. You can owe tax even though you have not sold the stock and have no sale proceeds to fund the bill.
For example, a founder pays $0.001 per share for restricted stock. If a tranche vests when those shares are worth $5 each, the ordinary-income spread for that tranche is $4.999 per share. A timely 83(b) election instead measures the spread at transfer.
What the election changes
The election includes the transfer-date spread in income even though the stock remains subject to vesting. Subsequent vesting ordinarily produces no further compensation income under Section 83. If the stock is a capital asset, later appreciation generally becomes capital gain on sale, and the capital-gain holding period begins just after transfer rather than after vesting.
The election does not accelerate contractual vesting, eliminate repurchase rights, establish the stock’s value, or guarantee QSBS treatment. It changes tax treatment, not the company’s agreement with you.
When the election is worth considering
The classic case is founder restricted stock purchased at fair market value while the company is worth little. The taxable spread may be zero, while substantial future appreciation is possible.
The same analysis can matter for employees, directors, advisors, and consultants receiving restricted stock for services, and for people who early-exercise options into restricted shares. The amount paid, current value, forfeiture terms, and the type of option all matter.
Analyze the transfer-date spread rather than treating a large purchase price as a large tax bill. Buying $100,000 of stock at its $100,000 fair market value can produce a zero spread; receiving stock worth $100,000 for nothing can produce substantial compensation income.
Downside: tax paid now can be hard to recover
If the election produces meaningful compensation income, you may pay tax before the stock is liquid. A later decline in value or forfeiture can make that decision costly.
Forfeiture does not reverse the compensation income included under the election. Any forfeiture loss is generally limited to the amount paid for the stock minus the amount received on forfeiture, and is capital if the stock is a capital asset. Repurchase at your original purchase price can leave no forfeiture loss. A later sale below tax basis is a different situation and can produce a capital loss. See Treasury Regulation Section 1.83-2(a).
Revocation requires IRS consent and is limited by the governing rules. Model the spread, liquidity needs, and forfeiture risk before filing.
RSUs: an RSU grant is a promise to deliver property later. It ordinarily transfers no property at grant, so an 83(b) election is not available for that grant. Fully vested stock also generally does not need an 83(b) election.
Early exercise: keep ISOs and NSOs separate
Exercise after vesting
If exercise produces fully vested, unrestricted shares, there is generally no Section 83 vesting deferral to elect out of. The exercise may still have income-tax or AMT consequences under the option’s rules.
Early-exercised NSOs
Some options permit exercise before vesting. You pay the exercise price and receive actual shares, with unvested shares typically subject to a company repurchase right if service ends.
For an NSO exercise into substantially nonvested shares, a timely 83(b) election generally measures ordinary income at transfer. Without it, income generally arises as the shares become substantially vested, using the spread at that later time.
Early-exercised ISOs
A qualifying ISO generally produces no regular federal compensation income at exercise. The AMT rules are separate: Section 56(b)(3) applies Section 83 principles, and a timely election on restricted ISO shares can measure the AMT spread at transfer rather than later vesting.
That spread may be zero, small, or substantial. Filing does not eliminate an existing spread or guarantee there will be no AMT. Same-year dispositions and other ISO rules can also affect the result.
The election does not move the Section 422 qualifying-disposition clocks: the one-year period relates to transfer on exercise, and the two-year period relates to option grant. Also check the $100,000 limit on stock first exercisable as ISOs in a calendar year; immediate exercisability can cause part of a grant to be treated as an NSO.
Read the ISO versus NSO guide and IRS stock-option guidance.
83(b) and the QSBS holding period
For restricted stock subject to Section 83, a timely election generally starts the tax holding period just after transfer rather than after each vesting date. That can be important for the Section 1202 exclusion, but the stock and issuer must separately satisfy all QSBS requirements.
For qualifying stock acquired after July 4, 2025, Section 1202 provides a 50% exclusion after at least three years, 75% after at least four years, and 100% after at least five years, subject to its limits. Stock acquired on or before that date remains under the earlier holding-period and exclusion rules; the familiar 100% regime for that stock generally applies to acquisitions after September 27, 2010 held for more than five years.
Do not assume an 83(b) election on early-exercised ISO stock controls every regular-tax holding-period question. ISO shares require their separate statutory analysis. Keep the exercise, transfer, vesting, and election records.
Read the QSBS guide and Section 1202.
Washington tax implications
Washington’s capital gains tax already exists. The 9.9% income tax enacted in ESSB 6346 is scheduled to begin January 1, 2028. The election can affect the year of compensation income, the character of later appreciation, and the holding period relevant to an eventual sale.
For ordinary restricted stock subject to Section 83, an election on a pre-2028 transfer can recognize the spread before the new income tax begins. Without an election, later vesting may create compensation income during a year covered by the tax. Whether tax is actually due depends on residency, sourcing, Washington adjustments, and deductions.
Capital gain is not automatically free of Washington tax. Long-term gain can fall within chapter 82.87 RCW; federally excluded QSBS gain generally falls outside that base. From 2028, ESSB 6346 Sections 302 and 205 coordinate long-term gains with the income tax through specified adjustments and a nonrefundable capital gains tax credit. Changing compensation into gain does not by itself establish a lower Washington rate.
For example, the strongest result may come from recognizing a small spread before 2028 and later qualifying for the federal QSBS exclusion. For a taxpayer whose later gain is fully taxable, the result can be very different. Model both the vesting path and the election-and-sale path.
Read how the two Washington taxes interact, the income-tax guide, and dated repeal and litigation updates. Primary authority: ESSB 6346.
Three examples
Founder stock purchased at fair market value
Sarah purchases two million restricted shares for $200 when their total fair market value is $200. Her timely election produces no compensation income because she paid fair market value. Subsequent vesting ordinarily causes no additional Section 83 income. A later sale has its own capital-gain and QSBS analysis.
Early exercise of an NSO
James early-exercises an NSO for 100,000 shares at $0.10 each when fair market value is also $0.10. He pays $10,000. A timely election on the restricted shares produces a zero spread. Without the election, appreciation before vesting could create ordinary income when each tranche becomes substantially vested. Potential QSBS eligibility remains a separate question.
A large taxable spread
Priya receives 50,000 restricted shares worth $15 each and pays nothing. An election would include $750,000 of compensation income immediately. She must evaluate the resulting tax, access to cash, and risk of forfeiture. The right answer for a founder paying fair market value is not automatically right for her.
Common mistakes
- Confusing an option or RSU grant with stock ownership. Confirm what property, if any, was transferred.
- Assuming the company filed for you. Confirm who is responsible and obtain the actual evidence.
- Treating a later tax return as the election. Attaching the form to a return does not replace timely filing.
What value should the election use?
Use fair market value at the transfer date under Section 83, determined without regard to lapse restrictions. The company’s valuation work can provide relevant evidence, but an independent 409A report is not a statutory prerequisite for every restricted-stock transfer and is not automatically conclusive for Section 83.
Document the value and amount paid. Do not miss the filing deadline while waiting for a report. Resolve valuation and issuance timing before the transfer where possible. See the 409A valuation guide.
Frequently asked questions
Can I revoke the election?
Only with IRS consent under the governing rules. A decline in value or a change of mind is not a general right to undo it. See Treasury Regulation Section 1.83-2(f) and Revenue Procedure 2006-31, referenced in the Form 15620 instructions.
What about LLC or partnership interests?
A capital interest transferred for services can be property subject to Section 83. Qualifying profits interests are governed by additional guidance, including Revenue Procedures 93-27 and 2001-43. An unvested profits interest meeting the latter safe harbor does not require an 83(b) election, although protective elections are used in practice. Review the actual interest and agreement rather than treating every LLC grant alike.
Do I need a state election?
Check the applicable state’s rules. Federal treatment often carries through, but conformity, sourcing, withholding, and moves between states can change the result. Washington planning considerations are addressed above.
Does this work for S corporation stock?
Section 83 can apply to S corporation restricted stock, but shareholder eligibility and the treatment of substantially nonvested stock create additional S corporation questions. S corporation stock does not qualify as QSBS.
Must I attach the election to my income-tax return?
For property transferred on or after January 1, 2016, the federal rule no longer requires attaching an election copy to the income-tax return. Timely filing of the election and delivery of the required copies still matter. Keep a permanent copy yourself.
Before you finish
Resolve any uncertainty about the grant’s tax cost or ownership before the filing deadline.
For related company work, see founder formation, cap-table administration, and the equity-compensation guide. For the policy argument, see reversing the 83(b) presumption.
If you need help with a grant or election, book a 20-minute introductory call. Share only the parties’ names and a brief, nonconfidential description until conflicts are cleared and a written engagement is in place.
This guide provides general information and is not legal or tax advice for a particular grant.
