83(b) Election Deadline: How a Founder Missed a 30-Day Window

83(b) Election Deadline: How a Founder Missed a 30-Day Window

The 83(b) election deadline is thirty days. Not a month, not "around the time you sign." Thirty days from the date the stock is transferred to you, and the IRS does not grant extensions.

Illustrative anonymized composite, drawn from recurring patterns rather than a single engagement. The firm named below was not involved in it. Nothing here is guaranteed or predictive.

This founder bought four million shares of her own company at a tenth of a cent each, $4,000 in total. The shares vested over four years, with a one-year cliff. The lawyer who papered the grant said "you'll want to file an 83(b)" in a closing email. Nobody put a date on it, and the thirty days ran out in the middle of a product launch.

Doug Johnson CPA is a paid featured member of Sam's List.

The firm that fits this problem is Doug Johnson CPA, a Los Angeles CPA firm that works with founders and employees holding equity compensation. It is covered near the end, and the story comes first.

The Setup Behind the 83(b) Election Deadline

Restricted stock is stock you own but can lose. If you leave before it vests, the company can buy back the unvested shares, usually at what you paid. Under Section 83 of the tax code, that risk of forfeiture delays when the stock counts as income.

Without an election, the clock starts at vesting, not at purchase. Each time a block of shares vests, you have ordinary income equal to the fair market value of those shares on that date, minus what you paid for them.

With an election, you pay tax up front on the difference between what the stock is worth at transfer and what you paid. For a founder buying at the company's formation price, that difference is often zero. Everything after that is taxed under the capital gain rules when she sells, not as pay when shares vest.

The limitation: an election is a bet. If the company fails or the shares are forfeited, tax paid up front is generally not refunded, and you cannot claim a loss for the amount you included in income. It is a good bet more often for early stock at a low price than for stock granted when the company is already worth a lot.

What Went Wrong After the Missed 83(b) Election Deadline

The founder assumed her lawyer had filed it. The lawyer assumed she would. The election is made by the person who receives the stock, in a signed written statement sent to the IRS within thirty days of the transfer, and the company's counsel is not automatically the one doing it.

She found out in the spring, when her accountant at the time asked for the stock purchase agreement to prepare her return. By then the deadline was about seven months gone.

A late 83(b) election is generally not accepted. The thirty days are written into the statute and the regulations, and the IRS has no general authority to waive them for a missed filing. A timely election sent by certified mail counts as filed on the postmark date, but an election nobody mailed counts as nothing.

The limitation: this is not a technicality anyone can talk around. Some founders spend months drafting a reasonable-cause letter that the IRS has no mechanism to grant. The better use of that time is planning for the tax that now exists.

What Restricted Stock Vesting Tax Looked Like Without the Election

The company was about to close a seed round that would set a new share price. That is where the missed election started to cost real money.

Here is the illustrative math, in plain numbers. All of it is invented for this composite.

Vesting date	Shares vesting	Assumed value per share	Ordinary income (value less $0.001 paid)
Month 12 (cliff)	1,000,000	$0.40	about $399,000
Month 24	1,000,000	$1.10	about $1,099,000
Month 36	1,000,000	$2.50	about $2,499,000
Month 48	1,000,000	$3.00	about $2,999,000

With a timely election, the income reported at grant would have been about zero, because she paid roughly what the shares were worth. Instead, almost $7 million of ordinary income was scheduled to arrive over four years, on stock she could not sell.

Three problems stacked up. Ordinary income rates are higher than long-term capital gain rates. The tax bill comes due in cash while the shares stay illiquid. And if she is an employee of the company, the company may have withholding and payroll tax obligations on the income at each vest, which the company had not planned for.

The limitation: those figures assume the value per share keeps rising. If the company's value falls later, the income already recognized at earlier vests is not undone, and a later loss on the shares is a capital loss, which may be limited in how it offsets ordinary income.

The Cleanup: What Could Be Fixed and What Could Not

Nothing could rescue the election. Everything around it could still be managed.

Confirm the facts first. The accountant checked for a certified mail receipt, a faxed copy, anything showing a timely filing. There was none. She also confirmed whether any of the shares were fully vested at issuance, since shares with no risk of forfeiture do not need an election. In this composite, all of them were subject to vesting.

Put numbers on each vest. The first cliff was months away. Estimating the income at that vest let her adjust estimated tax payments instead of facing a surprise in April, and avoid an underpayment penalty on top.

Talk to the company about how the tax gets paid. If the stock plan and the company's counsel allow it, the company can withhold shares to cover tax at vesting, or arrange a loan, or accelerate a financing event that creates liquidity. These are the company's decisions, and each has its own tax and legal consequences, so the lawyer and the CPA have to work from the same page.

Check the next grant. She had also been promised additional shares in a later refresh. For that one, the election was filed within the window, well inside it, with proof of mailing.

The limitation: none of this reduces the income. It changes when the cash is needed and how well she is prepared. If you are reading this with a live thirty-day window, filing now is worth more than anything above.

How to Protect the Next 83(b) Election Deadline

The fix is process, not memory.

Put the transfer date in a calendar with an alert at day 10 and day 20, not just day 30. Count thirty calendar days from the transfer date, and do not wait for the weekend after. Send the election by a trackable method, keep the receipt with the stock agreement, and give a copy to your accountant when you file, not when you are asked.

Then ask the question that started this problem: who is responsible for the filing? In the composite, the answer was "I assumed someone else." Name a person, in writing, before the grant is signed.

The limitation: a calendar reminder fixes the deadline, not the decision. Whether to file an election at all depends on the price you pay, the company's stage and your appetite for risk, and that conversation belongs before the thirty days, with a tax professional.

Where Doug Johnson CPA Fits

Doug Johnson CPA is a CPA firm in Los Angeles, founded in 2024, with 3 employees. It serves clients nationwide and positions itself as the CPA firm for growing businesses between $250,000 and $10 million in revenue and for high earners with equity compensation, with listed minimums of $250,000 income or $250,000 revenue.

Equity compensation planning is a calendar problem as much as a tax problem: grant dates, vest dates, election windows and estimated payments all sit on one timeline. A firm that works with equity holders is built to keep that timeline in view.

Doug Johnson CPA has 15 verified client reviews on Sam's List as of 2026-10-02. Each review is submitted by an individual who identifies as a client of the firm and rates it on communication, subject-matter knowledge, and overall satisfaction. Reviews reflect those individual experiences and do not represent an endorsement by Sam's List. Doug Johnson CPA is a paid Sam's List member. Ratings and rankings are not indicative of future performance or results.

The limitation, plainly: a three-person firm founded in 2024 has finite capacity and a short track record, so ask who does the work and who reviews it, especially near deadlines. A CPA does not draft the stock agreement or negotiate the grant terms, which are a lawyer's job.

Frequently Asked Questions

What is the 83(b) election deadline?

Thirty days from the date the property is transferred to you. The election is a signed written statement sent to the IRS. The date of the stock transfer, not the date you sign paperwork or the date the company records it, starts the clock, and the thirty days cannot be extended.

Can I make an 83(b) election late?

Generally no. The IRS does not accept a late 83(b) election, and there is no reasonable-cause process that rescues one. If the window has closed, the realistic options are planning for the tax at each vest and talking to your company and CPA about how it gets paid.

How is restricted stock taxed if I do not file an 83(b)?

Each time shares vest, you have ordinary income equal to their fair market value on that date minus what you paid. That income may be subject to withholding if you are an employee. Later growth after vesting is taxed as capital gain when you sell.

Should every founder file an 83(b) election?

Not automatically. It tends to make sense when the stock is bought at or near its current value, because there is little or no income to report up front. It carries risk if the shares are later forfeited or lose value. Decide with a tax professional before the thirty days run out.

If you were granted restricted stock this month, check today's date against the transfer date and ask who is filing. You can browse accountants on Sam's List, including the firm above.

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About the author: Kimberly Green is cofounder of Sam’s List, a directory and matching platform for financial professionals.