The IRS eliminated the need to attach a copy of the 83(b) election to the recipient’s tax return to property received on or after January 1, 2015. Your must file this election though with your employer and the IRS. The employer though is required to maintain and file this election for you and properly report the income as ordinary income on your w-2 box 1 or 1099Misc if you are an independent contractor box 7 of your 1099Misc.
http://www.taxlawroundup.com/2015/07/irs-eliminates-requirement-to-file-copy-of-section-83b-election...
No need to attach a hardcopy of the 83(b) election to your tax return though.
You still MUST file the 83(b) election within 30 days with the IRS, it is just NOT attached to your tax return.
Please note though that the amounts should be included in your w-2 as income correctly or in box 7 of your 1099Misc and it is considered compensation income and subject to SE taxes.
Assuming you paid nothing for your restricted stock, you will be taxed on the value of your restricted stock as determined at grant (if a Section 83(b) election is filed), or at vesting (if no Section 83(b) election is filed), in each case at the applicable ordinary income tax rate. When you later sell your stock, assuming it’s been more than one year from the date of grant (if a Section 83(b) election is filed), or more than one year from the date of vesting (if no Section 83(b) election is filed), the additional gain will be taxed at the applicable long-term capital gains rate. Because the long-term capital gains rate will be lower, the goal here is to get as much of your gain as possible taxed using that rate, rather than the ordinary income tax rate.
If you receive restricted stock worth a nominal amount, it normally makes sense to file one. However, what if instead of receiving 10,000 shares of restricted stock worth $.01 per share, you received 10,000 shares of restricted stock worth $1.00 per share? Filing a tax code Section 83(b) election would immediately cause you thousands of dollars of tax. And if the company subsequently fails, and in particular if it fails before your stock vests, you likely would have been economically better off to not have filed a Section 83(b) election.
You Can’t Make An 83(b) Election With Respect To A
Stock OptionIt is a common misconception, but a Section 83(b) election generally cannot be made with respect to the receipt of a private company stock option. You must exercise the option first and acquire the stock before you can make a Section 83(b) election, and you would only make a Section 83(b) election in that instance if you exercised the option and acquired unvested stock (if the stock acquired on exercise of the stock option was vested, there would be no reason to make a Section 83(b) election).
Another common misconception is that Section 83 does not apply to restricted stock that is purchased at fair market value. This is not true. Section 83 applies even to stock that has been purchased at fair market value, if the stock is subject to a substantial risk of forfeiture and received in connection with the performance of services. See this case, Alves vs. Commisioner.
An 83(b) election has to be filed with the IRS within 30 days of receipt of the property, a copy has to be filed with the tax return of the person making the election, and a copy must be provided to the company.
If you are fully vested, the shares are not subject to a risk under 83b, then no 83b election is required. But you should confirm your documents don’t subject your shares to a risk of forfeiture under 83b with your lawyer or whoever prepared the documents. This does not constitute legal advice.
https://www.govinfo.gov/content/pkg/CFR-2008-title26-vol2/xml/CFR-2008-title26-vol2-sec1-83-2.xml
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