83(b) Election: Tax Strategy for Employees Receiving Restricted Stock | Rob.CPA

[@jimwilder7828]

Thanks for the reply. The options for work $1 at issuance 13 months ago and now worth near a million dollars 13 months later.

[@eranmoshe]

Thanks for the video, very informative! I have a question about the taxation and reporting if I (founder) paid the company the FMV for the shares when granted (assuming I elected 83b), do I still need to recognize this as income on my payroll or there is no reporting and taxes until I sell the stocks in the future? tnx!

[@D-hc4ux]

How does the employee pay tax when he/she initially buys shares? On form 8949 as short term gains? Thank you

[@jimwilder7828]

Last year, I missed the 30 day deadline for the 83(b) election. I thought I filed it, but after calling the IRS, they see no record of the letter and form, so this obviously fell through the cracks on my end. The options were granted to me from my employer at the value of $1 just over one year ago. The company might be selling soon and this equity will be worth six figures. Will I be taxed as short term cap gains (like regular income)? I filed an extension to my 2023 taxes, so I have not filed 2023 when the options were granted. I am out of luck? Will hiring a tax attorney help?

[@rob_cpa]

You might check with a tax attorney...but if it was never filed, I don't believe there is an relief. The question is, your options would have a vesting schedule...if you never filed the 83b, they should have been taxed when substantial vesting has occurred. At this point, this would be considered ordinary income - compensation income. When you sell your shares, depending on how long you held them, they will be treated as LT or ST capital gain/loss. The key of the 83b by filing on time is avoiding the tax at time of vesting.