Guide
The 83(b) election, explained.
An 83(b) election tells the IRS to tax your restricted founder stock on the day you buy it — when it's worth almost nothing — instead of as it vests, when it may be worth a lot. You have exactly 30 days from the stock purchase to file. There are no extensions.
Why it exists
Founder stock usually comes with vesting: the company can repurchase unvested shares if you leave. Under Internal Revenue Code §83, stock that can be forfeited isn't taxed when you receive it — it's taxed as it vests, at whatever it's worth then. Great for the IRS if your startup takes off; terrible for you, because each vesting date becomes a taxable event on paper gains you can't sell.
The 83(b) election flips the timing: you elect to be taxed once, now, on the spread between what you paid and fair market value — typically about zero at incorporation. Future appreciation then falls under capital-gains treatment when you eventually sell, and your long-term holding period starts immediately.
The mechanics, briefly
Within 30 calendar days of the stock transfer: complete IRS Form 15620 (adopted in late 2024 as the standard election form), mail it to the IRS office where you file your return, keep dated proof of mailing, and give the company a copy. The decision and signature are the taxpayer's own — a filing service or agent can prepare, calculate the deadline, and track evidence, but cannot elect for you.
This is step eight of the Delaware C-Corp formation sequence; international founders should also see the EIN guide.
Do it from Claude Code
Corply generates the stock paperwork, starts the 30-day clock the moment stock is issued, prepares the election, and chases the deadline — the decision and signature stay yours.
then run /incorporate
FAQ
- When exactly does the 30-day clock start?
- On the date the stock is transferred to you (typically when you sign the stock purchase agreement and the shares are issued) — not when you get around to the paperwork. The deadline is statutory; the IRS cannot extend it.
- What if I paid fair market value for my shares?
- At incorporation, founders usually buy shares at par value, which typically equals fair market value at that moment — so the election reports roughly zero taxable income. That near-zero snapshot is exactly what the election locks in.
- How do I file?
- IRS Form 15620 (or a compliant written statement): mail it to the IRS office where you file returns within 30 days, and keep proof of mailing — certified mail with return receipt is the convention. An IRS online-account filing path also exists for those who can use it. Give a copy to the company for its records.
- What happens if I miss the deadline?
- No do-overs. Each vesting tranche becomes taxable as ordinary income on its fair market value when it vests — which, if the company grows, can mean large phantom tax bills on stock you can't sell. If you've missed it, talk to a tax professional about your options.
- Should every founder file one?
- The election is the taxpayer's decision, not an automatic step — that's why no software may make it for you. For founders buying cheap stock subject to vesting, filing is the overwhelmingly common choice, but confirm your situation with a tax advisor.
This page is general education, not legal or tax advice, and reading it does not create an attorney–client relationship. Corply is operated by 0Lumen Labs Corp., is not a law firm, and routes questions that need individualized judgment to licensed professionals. Rules and fees change — verify current requirements with the State of Delaware, the IRS, or your counsel.