A Section 83(b) Election is made to include the value of restricted property at the time of transfer (minus any amount you paid for the property) in your income for the year it is transferred. If you make this choice, the substantial vesting rules do not apply and, generally, any later appreciation in value is not included in your compensation when the property becomes substantially vested. Your basis for figuring gain or loss when you sell the property is the amount you paid for it plus the amount you included in income as compensation.
To make the Section 83(b) Election, file a written statement with the IRS office where you file your return no later than 30 days after the date the property was transferred. You must sign the statement and indicate on it that you are making the choice under section 83(b) of the Internal Revenue Code. The statement must contain all of the following information:
- Your name, address, and taxpayer identification number
- A description of each property for which you are making the choice
- The date or dates on which the property was transferred and the tax year for which you are making the choice
- The nature of any restrictions on the property
- The fair market value at the time of transfer (ignoring restrictions except those that will never lapse) of each property for which you are making the choice
- Any amount that you paid for the property
- A statement that you have provided copies to the appropriate persons (see Additional Information)
To indicate you want to attach a PDF copy of your Section 83(b) Election in the TaxACT program (once you have checked the box as directed below, during the electronic filing steps you will be prompted to attach the PDF):
- From within your TaxACT return (Online or Desktop), click on the Federal Q&A tab.
- Click Investment Income to expand the category
- Click Section 83(b) Election Statement
- Select the checkbox Check here if you will be attaching your Section 83(b) election statements as PDF.
If you do not have a PDF copy of your Section 83(b) Election, you will need to manually enter the requested information into your return:
- Click Federal Q&A under the Navigate menu on the left side of the screen
- Click Miscellaneous Topics to expand the section and then click Additional Information for Electronic Filing (the last one in the list)
- Click on Electronic Filing Notes and Explanations, then Continue to enter your election explanation
Note: This information will electronically file with the federal return, however, will not be transmitted to the state.
- Additional information on making the Section 83(b) Election can be found in IRS Publication 525 Taxable and Nontaxable Income, page 13, Restricted Property