What is 83(b) election?

A tax filing, due within 30 days of a restricted stock grant with no extensions, that moves the taxable event to the grant date, when the stock is nearly worthless, instead of each vesting date.

Why does 83(b) election matter to a founder?

Without the election, the IRS taxes you on the fair market value of each tranche as it vests, at whatever the stock is worth then, in a year when you have no cash to pay it. With it, you are taxed once on a near-zero value and the capital-gains clock starts immediately. The deadline is 30 days and there are no extensions; a missed filing follows the company through every diligence process for years.

What are the common mistakes with 83(b) election?

Missing the 30-day window, which cannot be reopened. Assuming a lawyer or cap-table platform filed it; confirm you have proof of mailing. Forgetting to file a protective 83(b) when a VC re-imposes vesting on already-vested founder shares.

83(b) election

CONCEPT · LAST REVIEWED 2026-09 · SOURCED FROM 3 SESSIONS, JAN–MAY 2026

When you receive stock subject to vesting, the tax default is to treat each vesting tranche as income at its fair market value on the day it vests. An 83(b) election tells the IRS to tax the whole grant on the grant date instead, when founder stock is typically worth a fraction of a cent per share. You must file it within 30 days of the grant.

Why it matters

The default outcome is paper income you cannot pay tax on.

From the room

“You get taxed on the fair market value of the stock at each vesting period… it’d be too painful to bear.”

— Startup securities attorney, 15 years of practice · session, May 2026. The example given: 250K shares vesting at $10/share is $2.5M of paper taxable income.

The election flips the tax event to a moment when the stock is nearly worthless, and starts your capital-gains holding period early, which is the difference between a 15% capital-gains rate and ordinary income later. It also comes up again later in the company’s life: if a lead investor makes re-vesting a closing condition on a solo founder’s fully vested shares, the attorney’s advice was to agree (“I want your money”) and file a protective 83(b) on the new restriction.

Where founders get it wrong

Missing the window. Thirty days from the grant, no extensions.
Assuming someone else filed it. Keep the proof of mailing in the data room.
Skipping the protective filing when vesting is re-imposed.

Numbers from the room

Figure	Value
Filing deadline	30 days from grant, no extensions
Founder stock purchase at incorporation	Par value, typically $20–100 total
Standard founder vesting	4 years, monthly, 1-year cliff

Go deeper

Founder stock, vesting, and 83(b) covers the full setup: Delaware C-corp, vesting design, and the traps of paying people in SAFEs or calling them volunteers.
Related concepts: Liquidation preference, Valuation cap.