83(b) Election: What's an IRC Section 83(b) Election

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IRC Section 83(b) Election
How an IRC Section 83(b) Election May Help Minimize Tax: The idea behind making an Internal Revenue Code Section 83 election is that a person elects to pays income tax to the IRS now on units/shares that have been received and not vested - in order to minimize tax liability at a later time.
The downside to an 83(b) election is that not all units granted unnecessarily turn into valuable stock - presuming the complete vesting occurs. In other words, a person may make a section 83(b) election and then the shares become worthless or never vest - and as a result, the Taxpayer ends up paying more tax then they would have paid (such as if the company goes under before the vesting period occurs.) let’s go through the basics of the Internal Revenue Code Section 83 (b) Election.