Section 83(b) Election Form

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This Section 83(b) Election Form allows an employee to change his or her treatment of restricted stock grant. This form must be filed with the Internal Revenue Service.

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The Section 83(b) election allows an employee to change the treatment of a restricted stock grant. With this election (which will be filed with the IRS), the employee is electing to pay tax on any discount from fair market value for shares of restricted stock at the time of acquisition rather than when the shares vests. Generally at the beginning of a new corporate endeavor, the shares of the new company will be valued close to zero and founders will often elect to purchase these shares at fair market value.

It is essential that this election be filed with the IRS within 30 days of purchase or acquisition. It is a strict deadline with little to no recourse if it is missed.

This election informs the recipient that he/she should consult with their tax advisor as to the consequences of this election. It also sets forth how, and when, the election form should be sent to the IRS and that failure to do so may subject the stock owner to adverse tax consequences.

This 83(b) Election Form contains:
  • Party: Sets forth the name, address and tax ID of the property owner;
  • Description: Specifies the number of company shares;
  • Fair Market Value: Sets out the fair market value of the shares at the time of transfer;
  • Certificate: Stock certificate which evidences the ownership of the stock shares;
  • Signatures: This agreement must be signed by the shareholder taking the election.

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This attorney-prepared packet contains:
  1. General Information
  2. Instructions and Checklist
  3. 83(b) Election Form
State Law Compliance: This form complies with the laws of all states
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.
 
 
Section 83(b) Election Form

 

 

The undersigned hereby makes an election pursuant to Section 83(b) of the Internal Revenue Code with respect to the property described below and supplies the following information in accordance with the regulations promulgated thereunder:
 
1. The name, address and taxpayer identification number of the undersigned are:
 
_______________
_______________
_______________
 
Taxpayer I.D. No. ________
 
2. Description of property with respect to which the election is being made:
________  (_____ ) shares of
 
Common Stock of _______________________ [Company]
 
3. Date on which property was transferred is ________ , 20__ .
 
4. Nature of restrictions to which property is subject: If, on or before ________ , 20__ , the employment of the taxpayer by ________________ [Company] terminates, other than by reason of taxpayers death or disability, the taxpayer must resell the Common Stock back to the Company for $________  per share.
 
The property is nontransferable in the taxpayers hands, by virtue of language to that effect stamped on the stock certificate.
 
5. The fair market value at time of transfer (determined without regard to any restrictions other than restrictions which by their terms will never lapse) of the property with respect to which this election is being made is $________  per share.
 
6. The amount paid by taxpayer for said property is $________  per share.
 
7. A copy of this statement has been furnished to ___________________ [Company].
 
Dated: ________ , 20__
 
_______________
(Signature of Purchaser)
 
[Companys Letterhead]
 
________ , 20__
 
Dear Shareholder:
 
Enclosed is the certificate which evidences your ownership of ________  shares of Common Stock in _______________________ [Company] (Company”). I have also enclosed a form for making an election under Section 83(b) of the Internal Revenue Code.
 
Section 83 of the Internal Revenue Code applies a tax to any discount from fair market value of stock issued in connection with the performance of services, the discount normally being measured by the difference between the purchase price of the stock and its fair market value at the time any repurchase restrictions lapse.
 
However, Section 83(b) provides for an election to pay any tax on any discount at the time of purchase, provided such election is filed with the IRS within 30 days after such purchase of stock. Even where there is no discount, the Section 83(b) election form must nevertheless be filed.
 
You should consult with your tax adviser as to the tax consequences of Section 83 as applied to your purchase of stock of the Company. For your convenience, we have enclosed a Section 83(b) election form. Please note that the Section 83(b) election form must be filed not later than 30 days after the date of issuance of the stock.
 
Accordingly, the election form should be mailed to the Internal Revenue Service office at which you regularly file your tax return, postmarked no later than ________ , 20__ . A copy of the election form must also be attached to your personal income tax return for 20__ . Another copy of the election form must be forwarded to the Company.
 
Please note that your failure to make a timely Section 83(b) election may subject you to adverse tax consequences.
 
 
 
Very truly yours,
 
[Name of Company] 
 
_______________
(Authorized Officer)
 
 
Number of Pages6
DimensionsDesigned for Letter Size (8.5" x 11")
EditableYes (.doc, .wpd and .rtf)
UsageUnlimited number of prints
Product number#43679
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.
 
 
Section 83(b) Election Form

 

 

The undersigned hereby makes an election pursuant to Section 83(b) of the Internal Revenue Code with respect to the property described below and supplies the following information in accordance with the regulations promulgated thereunder:
 
1. The name, address and taxpayer identification number of the undersigned are:
 
_______________
_______________
_______________
 
Taxpayer I.D. No. ________
 
2. Description of property with respect to which the election is being made:
________  (_____ ) shares of
 
Common Stock of _______________________ [Company]
 
3. Date on which property was transferred is ________ , 20__ .
 
4. Nature of restrictions to which property is subject: If, on or before ________ , 20__ , the employment of the taxpayer by ________________ [Company] terminates, other than by reason of taxpayers death or disability, the taxpayer must resell the Common Stock back to the Company for $________  per share.
 
The property is nontransferable in the taxpayers hands, by virtue of language to that effect stamped on the stock certificate.
 
5. The fair market value at time of transfer (determined without regard to any restrictions other than restrictions which by their terms will never lapse) of the property with respect to which this election is being made is $________  per share.
 
6. The amount paid by taxpayer for said property is $________  per share.
 
7. A copy of this statement has been furnished to ___________________ [Company].
 
Dated: ________ , 20__
 
_______________
(Signature of Purchaser)
 
[Companys Letterhead]
 
________ , 20__
 
Dear Shareholder:
 
Enclosed is the certificate which evidences your ownership of ________  shares of Common Stock in _______________________ [Company] (Company”). I have also enclosed a form for making an election under Section 83(b) of the Internal Revenue Code.
 
Section 83 of the Internal Revenue Code applies a tax to any discount from fair market value of stock issued in connection with the performance of services, the discount normally being measured by the difference between the purchase price of the stock and its fair market value at the time any repurchase restrictions lapse.
 
However, Section 83(b) provides for an election to pay any tax on any discount at the time of purchase, provided such election is filed with the IRS within 30 days after such purchase of stock. Even where there is no discount, the Section 83(b) election form must nevertheless be filed.
 
You should consult with your tax adviser as to the tax consequences of Section 83 as applied to your purchase of stock of the Company. For your convenience, we have enclosed a Section 83(b) election form. Please note that the Section 83(b) election form must be filed not later than 30 days after the date of issuance of the stock.
 
Accordingly, the election form should be mailed to the Internal Revenue Service office at which you regularly file your tax return, postmarked no later than ________ , 20__ . A copy of the election form must also be attached to your personal income tax return for 20__ . Another copy of the election form must be forwarded to the Company.
 
Please note that your failure to make a timely Section 83(b) election may subject you to adverse tax consequences.
 
 
 
Very truly yours,
 
[Name of Company] 
 
_______________
(Authorized Officer)
 
 

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