Raising money · A term for founders abroad
What is an 83(b) election?
A founder's choice to be taxed on restricted stock when it's granted rather than as it vests, filed with the IRS within 30 days, with no extension.
Checked against the IRS's instructions and the states' own rules. Reviewed by Saais Patel, compliance reviewer.
Term 2 of 105 in the glossary, filed under 0–9.IRS: Form 15620, the section 83(b) election
83(b) election, for a founder abroad.
Founders of a C-Corporation usually receive stock that vests over time. Without an 83(b) election, each vesting can be taxed at the stock's value then. The election taxes the whole grant at its value on day one, which for a new company is close to nothing.
- Deadline: within 30 days of the grant, with no extension. A day 30 on a weekend or US holiday moves to the next working day.
- Form: Form 15620, posted to the IRS office where you'd file your return, or a letter that meets the rules.
- Copy: one to the company, which the form requires.
- No SSN or ITIN: advisers' usual practice is to write "Applied For" and enclose a copy of a Form W-7 application.
What founders ask next.
- Does a founder abroad need an 83(b) election?
- Usually yes, if the stock vests. The US may tax little while you work abroad, but your home country may tax vesting stock, and a later move to the US would bring US tax.
- Can the 30 days be extended?
- No. There's no extension and no late election. The 83(b) guide covers filing from abroad.
- Do LLC members file an 83(b) election?
- Not usually. It's for vesting stock in a corporation; an LLC granting vesting interests should ask a tax adviser.
03 · See also
- The company itselfC-CorporationA US corporation taxed on its own profit, which issues stock and is what US investors' paperwork assumes; usually formed in Delaware.Read the term
- Raising moneyCap tableThe record of who owns what share of a company, including options, SAFEs and other convertible instruments; investors read it first.Read the term
- Raising moneySAFEAn investment contract, published by Y Combinator, where an investor pays now for shares issued at a later priced round; used by US corporations.Read the term
- Raising moneyAuthorised sharesThe most shares a corporation may issue, set in its certificate of incorporation; ten million is common for a startup.Read the term
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