What happens if I miss the 30 days?

You are taxed as the stock vests, on its value at each vesting date. If the company has raised at a higher valuation in the meantime, that means income tax on paper gains from shares you cannot sell. There is no general relief for a missed election.

Do I need an 83(b) if my shares are not subject to vesting?

Generally no — the election addresses property subject to a substantial risk of forfeiture. If your shares are fully vested at grant there is nothing to elect. Confirm the position rather than assuming, because founder shares are commonly subject to vesting at a financing.

Does it apply to stock options?

Not to the option grant itself. It can be relevant on an early exercise of unvested options. The mechanics differ from restricted stock, so take advice specific to your instrument.

Scaling, fundraising and exiting a US company

Fix it · 2 min read

The 83(b) election: 30 days, no extensions

A short form with disproportionate consequences. The deadline is the entire story.

The short answer

An 83(b) election chooses to be taxed on restricted stock at grant rather than as it vests. When stock is worth almost nothing at grant, this means paying tax on almost nothing and starting the capital gains clock early. It must be filed with the IRS within 30 days of the grant, and the deadline cannot be extended.

What it actually does

Without an election, restricted stock is taxed as it vests, on its value at each vesting date. With an election, it is taxed once at grant, on its value then.

At founding, that value is usually negligible, so the tax is negligible. It also starts the capital gains holding period immediately rather than tranche by tranche, which matters at exit.

The scenario that hurts

A founder takes restricted stock at founding when it is worth essentially nothing and files nothing. Eighteen months later the company raises at a meaningful valuation. Each subsequent vesting tranche is now taxed as ordinary income at the new valuation — on shares that cannot be sold to pay the resulting bill.

For where this sits in a financing, see the Delaware flip.

Frequently asked questions

What happens if I miss the 30 days?: You are taxed as the stock vests, on its value at each vesting date. If the company has raised at a higher valuation in the meantime, that means income tax on paper gains from shares you cannot sell. There is no general relief for a missed election.
Do I need an 83(b) if my shares are not subject to vesting?: Generally no — the election addresses property subject to a substantial risk of forfeiture. If your shares are fully vested at grant there is nothing to elect. Confirm the position rather than assuming, because founder shares are commonly subject to vesting at a financing.
Does it apply to stock options?: Not to the option grant itself. It can be relevant on an early exercise of unvested options. The mechanics differ from restricted stock, so take advice specific to your instrument.

Sources

IRS — Topic 427, Stock options and restricted stock

Last reviewed August 23, 2026. Verify against the primary source before acting.

Founders 8 does not provide tax advice. Tax residency depends on facts and rules specific to each jurisdiction — review your position with a qualified adviser.

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