The 83(b) election is a form used by shareholders in private companies to notify the Internal Revenue Service (IRS) that they have early exercised shares that are subject to vesting. US-based startup founders must file this form when purchasing their founder shares or risk paying a huge tax bill in the future when they go to sell their equity. Filing the 83(b) election form effectively set the clock for long-term capital gains for founder equity grants and shares held more than a year typically qualify for tax treatment as long term capital gains instead of as ordinary income.
Learn why you should file your 83 (b) election when purchasing your founders shares in your startup. Topics covered include tax implications, filing deadlines, and the process to complete the 83(b) election filing with the IRS.
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