83(b)
Business & Finance abbreviation · Tax
| Stands for | Section 83(b) election |
|---|---|
| Categories | Business & Finance |
83(b) stands for Section 83(b) election, a tax abbreviation.
Election under section 83(b) of the Internal Revenue Code that lets someone receiving restricted stock pay income tax on its value at grant instead of as it vests. When shares are granted at a low value, as for startup founders, later appreciation can then be taxed as capital gain.
Example: Every founder should file an 83(b) within 30 days of receiving restricted shares.
Usage notes
The 30-day deadline is strict and cannot be extended, making a missed 83(b) one of the costliest errors in startup tax. If the stock is later forfeited, the tax paid is not refunded. The election applies to restricted stock, including early-exercised options, but not to RSUs.
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