Important Update Regarding Section 83(b) Election

On June 25, 2012, the Internal Revenue Service issued a new Revenue Procedure 2012-29, which provides sample language that should be used to make a Section 83(b) election as well as examples of the income tax consequences of making a Section 83(b) election in various circumstances.

The new Revenue Procedure will be useful for startup founders and other restricted stock recipients who hold stock subject to vesting.  It is highly advisable to consult an accountant when making this election to ensure that it is done properly.  Remember that you only have 30 days from the moment of the stock grant to make the Section 83(b) election.  Missing the deadline can result in expensive and unintended tax consequences.

This article is not a legal advice, and was written for general informational purposes only.  If you have questions or comments about the article or are interested in learning more about this topic, feel free to contact its author, Arina Shulga.  Ms. Shulga is the founder of Shulga Law Firm, P.C., a New York-based boutique law firm specializing in advising individual and corporate clients on aspects of business, corporate, securities, and intellectual property law.