While many startup companies give stock\noptions to employees, others give restricted stock to its founders and some\nemployees. \u201cRestricted stock\u201d is stock\nthat is granted to a stockholder, but that is restricted because it cannot be\ntransferred or sold by that stockholder and may even be taken back by the\ncompany until certain conditions are met. When the conditions are met, the\nstock is released from the restrictions, and the stock is said to be \u201cvested.\u201d <\/p>\n\n\n\n
If you are granted restricted stock, filing\nan 83(b) election might save you money on taxes, so it is useful to know how these\nelections work and when they may be useful. The steps required to file an 83(b)\nelection are relatively simple, and a list is outlined below explaining the\nprocess. <\/p>\n\n\n\n
In short, an 83(b) election is a letter\nsent to the IRS within 30 days of the date restricted stock is granted to you to\nlet the IRS know that you want the stock to be taxed on the date it was granted.\nOtherwise, you will pay taxes on the date the stock vests, which may mean that\nyou pay more taxes.<\/p>\n\n\n\n
\u00bfPor qu\u00e9<\/strong><\/p>\n\n\n\n An 83(b) election may be filed when you have been granted restricted stock, and the stock is vesting to you over time. By filing an 83(b) election, you elect to pay income taxes on all the stock you have been granted on the date it is granted. Without the 83(b) election, you would pay income taxes on the stock over time as it vests, and if the stock increases in value over time, you pay more taxes than you would have on the date the stock was granted when the stock had less value. If you file an 83(b) election, and the stock increases in value over time, you pay less taxes because the taxes you pay are based on the stock\u2019s lower value from the date it was granted to you. <\/p>\n\n\n\n However, 83(b) elections may not be advantageous in every scenario. When deciding whether to file an 83(b) election, be sure to consider the following: <\/p>\n\n\n\n How<\/strong><\/p>\n\n\n\n If you decide to file an 83(b)\nelection, an outline of the basic steps are as follows:<\/p>\n\n\n\n <\/p>\n\n\n\n This post lays out the basic outline of the steps required for filing an 83(b) election, but complications may arise or details may change. Please note that this post (1) is not provided in the course of and does not create or constitute an attorney-client relationship, (2) is not intended as a solicitation, (3) is not intended to convey or constitute legal advice, and (4) is not a substitute for obtaining legal or tax advice from qualified professionals.<\/p>","protected":false},"excerpt":{"rendered":" While many startup companies give stock options to employees, others give restricted stock to its founders and some employees. \u201cRestricted stock\u201d is stock that is granted to a stockholder, but that is restricted because it cannot be transferred or sold by that stockholder and may even be taken back by the company until certain conditions […]<\/p>","protected":false},"author":1,"featured_media":792,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"yoast_head":"\n