What Is An 83(b) Election and When Do I Make It? - Accelerated Vesting - Accelerated Vesting

What Is An 83(b) Election and When Do I Make It? - Accelerated Vesting – Accelerated Vesting

Startup Law Explained What Is An 83(b) Election and When Do I Make It? [Part 1 – With Graphic!] February 26, 2013 What’s an 83(b) election, and when is it a good thing to do? Great question, and one every entrepreneur, founder, contractor, or anyone else trading work for equity should know the answer to. In this two-part post, I’ll first explain what the 83(b) election is, then I’ll walk through a situation where making the election makes good sense, and in the second installment I’ll walk through a situation in which making the election wouldn’t make sense (and some other considerations that might prevent you from making it). And with that, off we go. As a basic starting point, when you’re given equity in a company as compensation you have to pay taxes on it the same way you have to pay taxes on any other income. When it comes to how much you pay, the IRS is going to calculate your tax liability based upon the fair market value of the equity at the time it’s transferred to you.

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