The 83(b) election: 30 days, no second chances

Most startup deadlines forgive you. Miss the franchise tax and you pay a penalty; skip an annual meeting and you paper a consent late. The 83(b) election is the exception: 30 days from the day you purchase restricted stock, and the window never reopens. Not for good cause, not for a well-argued letter, not for a founder who genuinely didn’t know. The window is jurisdictional — the IRS couldn’t accept a late election even if it wanted to.

What the election actually does

When you buy restricted (vesting) founder stock, the default tax treatment under 26 U.S.C. §83 is brutal in slow motion: you’re taxed as each tranche vests, on the spread between what you paid and what the stock is worth at vesting. If the company does well, every vesting date becomes a tax bill on paper gains you can’t sell.

The 83(b) election flips the default. You elect to be taxed once, now, at purchase — when the spread is typically zero, because you bought at fair market value on day one. File it, and vesting becomes a non-event for taxes. Your capital-gains clock starts immediately too.

The clock, concretely

The window is 30 calendar days from the transfer date — the purchase date on your Stock Purchase Agreement or Restricted Stock Award, not the day you got around to reading it. Weekends and holidays count. A purchase signed January 10 means the election must be postmarked by February 9.

Two documents matter afterward: the election itself, and proof of delivery. Certified mail with a return receipt is the standard. Diligence treats a missing proof the same as a missing election.

The early-exercise variant

The same statute produces a second, sneakier clock. If your option plan allows early exercise — buying shares before they vest — the shares you receive are restricted property, and the 30-day window starts on the exercise date. Standard exercises of vested options don’t trigger it; early exercises do. Founders miss this one more often than the original, because nothing in the exercise paperwork shouts about it.

What missing it costs

A founder who missed the 83(b) on cheap founder stock at a company that later raises at a real valuation faces income tax at each vest on the difference — routinely a five- or six-figure liability that a one-page letter would have made zero. It’s also a diligence classic: investors ask for 83(b) proof for every founder, and a missing one becomes a negotiation about who bears the risk. Some deals reprice over it. It is the single most expensive piece of paper a founder can fail to mail.

How the room tracks it

Standing’s deadline engine reads the purchase date from your Stock Purchase Agreement or RSA the moment it’s filed, starts the 30-day countdown, and watches for the election and its proof of delivery to land in the room. Early exercises get the same treatment with the conditional flagged. High severity, nudges before the window closes — because this is the one deadline nobody can fix for you afterward.