Section 83(b) ??

[Neta160]

Hi,

In 2020, my employer offered me an opportunity to buy shares in the company (private limited company in England) for 4,000 USD that I could cash out in 4 years with a target value of 175,000 USD.  It is basically an employee retention plan.

I was required to sign a PS&A, file Form 83(b), and a Deed of Adherence.

Can someone please explain what this plan is referred to and what I need to do on my tax return for this situation, if anything?

Best,

Tim

[Cynthiad66]

When you buy stock under an employee stock purchase plan (ESPP), the income isn't taxable at the time you buy it. You'll recognize the income and pay tax on it when you sell the stock. When you sell the stock, the income can be either ordinary or capital gain.

Restricted stock units (RSUs) and stock grants are often used by companies to reward their employees with an investment in the company rather than with cash.  As the name implies, RSUs have rules as to when they can be sold. Stock grants often carry restrictions as well. How your stock grant is delivered to you, and whether or not it is vested, are the key factors when determining tax treatment.

Please see the link below for more information.

How to report RSUs and Employee Stock Grants

[Neta160]

This was an excellent response and very clear.  I appreciate the link to the legal details too.  

Best,

Tim