This can save founders and other service providers a massive amount of income tax, but the rules are complicated and very specific. For instance, a startup with two founders, each subject to vesting has one founder who makes an 83(b) Election and another who does not. Additionally, in our experience, people deciding whether to make an 83(b) Election focus less on what happens if, after the 83(b) Election, the shares experience meaningful volatility. Clients often ask us whether the following trigger (or create an opportunity to make) an 83(b) Election: stock options, the grant of an interest (equity) in a limited liability company (LLC), or a restricted stock unit (or “RSU”). And once made, in only very special circumstances can the taxpayer revoke or amend that 83(b) Election.

Source: Forbes February 08, 2020 20:03 UTC