83(b) Election Guide for Pre-Seed Founders (The 30-Day Rule)
last updated: Feb 24, 2026
You just incorporated your company, but the clock is already ticking on the single most critical tax document of your founder journey. If you miss the strict 30-day window to file your 83(b) election, you are voluntarily choosing to pay massive taxes on your future success instead of pennies today.
TL;DR
An 83(b) election is a letter sent to the IRS notifying them you wish to be taxed on your equity upfront (at its current near-zero value) rather than as it vests over time. This locks in your tax liability at the start, potentially saving millions in future income tax.
How to read this: Use this guide to file immediately after signing your 83(b) Election Startup Script.
How to read this: Use this guide to file immediately after signing your 83(b) Election Startup Script.
Glossary
- 83(b) Election: A provision under the Internal Revenue Code that allows you to pay tax on the fair market value of restricted stock at the time of granting rather than vesting.
- Vesting: The process of earning your shares over time (usually 4 years). Without an 83(b), every tranche that vests is a taxable event under Section 83(a).
- Stock Purchase Agreement (SPA): The legal contract between you and the company that actually grants you the shares. The 30-day timer starts here.
- Fair Market Value (FMV): The price the stock would sell for on the open market. At incorporation, this is often par value (e.g., $0.00001).
How to file the 83(b) election
Follow this strict protocol to file your election. Do not rely on regular mail.
1. Execute the Stock Purchase Agreement
You cannot file an 83(b) election until you legally own the stock which is subject to vesting. Sign your Stock Purchase Agreement (SPA) immediately upon incorporation. Note the "Date of Grant" on this document.
Sample math: If your par value is $0.00001 and you get 4,000,000 shares, your total stock value is $40. Your taxable income to report is $40.
2. Complete the 83(b) Election Form
Fill out the standard IRS 83(b) election form. While many incorporation services generate this, you can use the standard template below based on IRS Revenue Procedure 2012-29.
SECTION 83(b) ELECTION
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in gross income as compensation for services the excess (if any) of the fair market value of the shares described below over the amount paid for those shares.
1. Taxpayer Name: [YOUR NAME]
Address: [YOUR ADDRESS]
SSN: [YOUR SSN]
Tax Year: Calendar Year 20[XX]
2. Description of Property: [NUMBER OF SHARES] shares of Common Stock of [COMPANY NAME], a Delaware Corporation.
3. Date of Transfer: [DATE FROM SPA]
4. Nature of Restrictions: The shares are subject to a repurchase option in favor of the Company which lapses over time.
5. Fair Market Value at Transfer: $[TOTAL VALUE, E.G., 40.00]
6. Amount Paid: $[AMOUNT PAID, E.G., 40.00]
7. Amount to Include in Gross Income: $0.00 [Line 5 minus Line 6]
[SIGNATURE]
[DATE]
Ensure the "Date of Transfer" matches your SPA date exactly.
3. Prepare the Mailing Package
Print 3 copies of the signed form. You also need a cover letter (optional but recommended) and a self-addressed, stamped envelope (SASE).
4. Mail via USPS Certified Mail with Return Receipt
Go to a physical post office. Do not drop this in a blue bin. Request "Certified Mail with Return Receipt". This provides legal proof of the mailing date.
Where to send: Mail it to the IRS Service Center where you would normally file your individual income tax return.
5. Archive the Proof
When the green Return Receipt card comes back to you, staple it to your copy of the 83(b) and scan it immediately. Upload this to your data room. If investors cannot see proof of timely filing, your company becomes "uninvestable" or requires expensive legal cleanup. See our 83(b) Election Startup Guide for more details on storage.
1. Execute the Stock Purchase Agreement
You cannot file an 83(b) election until you legally own the stock which is subject to vesting. Sign your Stock Purchase Agreement (SPA) immediately upon incorporation. Note the "Date of Grant" on this document.
Sample math: If your par value is $0.00001 and you get 4,000,000 shares, your total stock value is $40. Your taxable income to report is $40.
2. Complete the 83(b) Election Form
Fill out the standard IRS 83(b) election form. While many incorporation services generate this, you can use the standard template below based on IRS Revenue Procedure 2012-29.
SECTION 83(b) ELECTION
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in gross income as compensation for services the excess (if any) of the fair market value of the shares described below over the amount paid for those shares.
1. Taxpayer Name: [YOUR NAME]
Address: [YOUR ADDRESS]
SSN: [YOUR SSN]
Tax Year: Calendar Year 20[XX]
2. Description of Property: [NUMBER OF SHARES] shares of Common Stock of [COMPANY NAME], a Delaware Corporation.
3. Date of Transfer: [DATE FROM SPA]
4. Nature of Restrictions: The shares are subject to a repurchase option in favor of the Company which lapses over time.
5. Fair Market Value at Transfer: $[TOTAL VALUE, E.G., 40.00]
6. Amount Paid: $[AMOUNT PAID, E.G., 40.00]
7. Amount to Include in Gross Income: $0.00 [Line 5 minus Line 6]
[SIGNATURE]
[DATE]
Ensure the "Date of Transfer" matches your SPA date exactly.
3. Prepare the Mailing Package
Print 3 copies of the signed form. You also need a cover letter (optional but recommended) and a self-addressed, stamped envelope (SASE).
- Copy 1: Goes to the IRS.
- Copy 2: Goes to the IRS (requesting them to stamp and return it in your SASE).
- Copy 3: Stays with your company records and Cap Table.
4. Mail via USPS Certified Mail with Return Receipt
Go to a physical post office. Do not drop this in a blue bin. Request "Certified Mail with Return Receipt". This provides legal proof of the mailing date.
Where to send: Mail it to the IRS Service Center where you would normally file your individual income tax return.
5. Archive the Proof
When the green Return Receipt card comes back to you, staple it to your copy of the 83(b) and scan it immediately. Upload this to your data room. If investors cannot see proof of timely filing, your company becomes "uninvestable" or requires expensive legal cleanup. See our 83(b) Election Startup Guide for more details on storage.
Benchmarks
- Cost: $5-15 (USPS Certified Mail).
- Time: 30-60 minutes.
- Deadline: Strictly 30 days from the stock grant date.
- ROI: High. You pay ~$0 in taxes now versus ordinary income tax on the full value of shares at exit.
Risks
The IRS rarely grants relief for late filings. Day 31 is fatal. If you miss this window, you cannot simply "fix it" later. You will be taxed on the difference between the stock's value when granted and its value as it vests. If your startup grows to be worth millions, this tax bill can be astronomical, often requiring you to pay cash taxes on "paper wealth" you haven't realized yet.
Conclusion
Mastering the 83(b) election is a necessary administrative step. Filing it won't automatically get you to $10k MRR, but skipping it ensures your eventual exit feels like a punishment rather than a victory. It is a binary test of operational competence: file the paper, archive the proof, and get back to building.
FAQ
- You:Can I file the 83(b) election online?Guide:Generally, no. While the IRS has introduced Form 15620 for standardization, the safest and most widely accepted method for an 83(b) election is still a physical wet signature mailed via USPS Certified Mail. Do not risk your financial future on ambiguous e-filing rules.
- You:What happens if I miss the 30-day deadline?Guide:You are stuck. There is virtually no way to "fix" a missed 83(b) election. You will be taxed on the difference between the stock's value when granted and its value as it vests. If your startup grows, this tax bill can be astronomical.
- You:Do non-US founders need to file an 83(b)?Guide:If you are a non-resident alien and pay US taxes (or expect to become a US tax resident), you should likely file one to be safe. Consult a US tax professional. It is better to file and not need it than to need it and not have filed.
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