83(b) election for cofounders: the 30-day rule

An 83(b) election for cofounders is a one-page IRS filing that lets you pay tax on your founder stock at today's value, which at formation is usually close to nothing. You have 30 days from the day you receive the shares. Miss it and you are taxed on each tranche as it vests, at whatever the company is worth then.

What does an 83(b) election change?

It moves the tax to the grant date. Without it, the IRS taxes each tranche when it vests. With it, you are taxed once, on the whole grant, at its value on day one.

Founder stock usually vests. You own it from the start, but the company can buy back the unvested part if you leave early. Without an election, Davis Wright Tremaine explains, you are taxed on the fair market value of the stock as it vests. If the company is worth far more two years in, you owe income tax on that higher value, tranche by tranche, before you have sold a single share.

With the election, the same article notes, any growth after the grant is taxed as a capital gain when you sell. That is usually a lower rate, and you pay it when you have cash from the sale.

Why is the 30-day deadline so strict?

Because the IRS treats it as absolute. The election must be filed within 30 days of receiving the shares, and in Davis Wright Tremaine's words, "there are no exceptions!"

There is no hardship rule and no late fix. If you are waiting on a final cap table number or a signature from the company, you are taking a real risk for nothing. File on time.

How do you file an 83(b) election?

Do it the same week you sign your stock paperwork.

1. Fill in the form with your name, the number of shares, the grant date and the value per share.
2. Send it by USPS Certified Mail with Return Receipt to the IRS office where you file your paper tax return.
3. Get the certified mail receipt postmarked at the post office, and track the envelope so you can resend it if it is lost.
4. Keep the postmarked receipt, the tracking history and any return receipt with your company records.
5. Give the company a copy.

If you set up your stock paperwork on Clerky, it emails you pre-filled 83(b) forms with filing steps, and offers a paid add-on to file for you. Use whatever tool you like. What matters is the postmark date.

Does each cofounder file separately?

Yes. Each of you receives your own grant and has your own 30-day window from your own grant date. One cofounder filing does not cover anyone else.

This is where teams slip. You sign the equity documents together, so everyone assumes the tax filings were handled together too. They were not. Name one person to check that every founder has filed, and ask to see the postmarked receipts. Our guide to splitting cofounder equity covers the wider agreement this sits inside.

What about shares that get new vesting later?

Ask your lawyer before you sign. Some founders start with fully vested shares, then agree to put them back under vesting during a fundraise. This is called reverse vesting. The election you filed at formation may not cover shares that become restricted under a new agreement, and if a new filing is needed, its 30 days start from the new agreement. Our post on what VCs require in founder vesting terms explains when this comes up.

Why does a tax form belong in a cofounder conversation?

Because a missed 83(b) is almost always an ownership problem. Nobody was named to do it, and nobody checked. If one cofounder filed and the other did not, one of you may face a tax bill the other avoided, and that gap turns into resentment fast.

Put founder paperwork, tax elections included, on the same list as roles, equity and decision rights. A Blueprint from Founders Align is one shared, signed document of who owns what, how you decide and how equity works. If a missed filing has already caused friction, our cofounder conflict resolution guide shows how to talk it through before it hardens.

The day you receive your grant, put a date 20 days out in both your calendars and mail the forms before it.