Startup Law 101 Series – What is an 83(b) election and how does it work in practice?

Introduction

IRC Section 83 Applies to Service Providers Who Receive Property in Exchange for Services

Section 83(a) Specifies How and When Such Service-Related Income Is Taxed

The Nightmare Tax Scenario for Founders

Section 83(b) Comes to the Rescue

Tips for How 83(b) Applies in Practice

Conclusion – Use Professionals to Help You Do It Right

That ends our tour for the benefit of giving the founder a bird’s-eye view of the 83(b) election. Again, this is by no means complete and nothing is safe in this area unless done under the supervision of a good business attorney. Use this for your working knowledge and then make sure to do it right by working with competent professionals to help you implement the key steps.