83(i) Election Sample Form

By Ray Raff

The new tax bill created an election under Section 83(i) of the Internal Revenue Code. This election is available to qualified employees of private companies who wish to defer income taxation for up to 5 years from a “qualified equity grant” (QEG). A QEG may be shares received from exercised stock options or a settlement of a restricted stock unit (RSU).

The 83(i) election must be made within 30 days of the award becoming substantially vested or transferable, whichever occurs earlier.

At the time QEG stock is transferred, the employer is responsible for notifying employees of the following:

  • The stock is eligible for the 83(i) election
  • The amount of income required to be included at the end of the deferral period
  • That the amount of income was calculated at the time the stock first becomes substantially vested, notwithstanding whether the value of the stock has declined during the deferral period.

The IRS has yet to publish guidance on the new 83(i) election. However, we decided to exercise a single share of Carta stock and file an accompanying 83(i) election to test if it would be accepted. On January 9th, we received confirmation from the IRS’ Fresno office that the election was received.

We have attached the form we used to file the election. If you have received a notice from your employer that the election is available and you wish to make the election, feel free to use the attached form.

Sample 83(i) election

This post and the election form should not be considered tax or legal advice.

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eShares, Inc. DBA Carta, Inc. is a transfer agent registered with the U.S. Securities and Exchange Commission. The services and information described in this communication are provided to you “as is” and “as available” without warranties of any kind, expressed, implied or otherwise, including but not limited to all warranties of merchantability, fitness for a particular purpose, or non-infringement. Neither eShares, Inc. DBA Carta, Inc. nor any of its affiliates will be liable for any damages, including without limitation direct, indirect, special, punitive or consequential damages, caused in any way or arising from the use of the services or reliance upon the information provided in this communication or in connection with any failure of performance, error, omission, interruption, defect, delay in operation or transmission, computer virus or line or system failure. Transfer Agent services for DTC-eligible registered companies provided by Philadelphia Stock Transfer, a Carta affiliate. Carta Securities LLC is a broker-dealer and a member of FINRA and SIPC. Contact: eShares, Inc. DBA Carta, Inc., 195 Page Mill Road, Suite 101, Palo Alto, CA 94306.