Do I need to report 83(b) election on 1040 for founder stock purchase?

You don't need to attach the 83(b) election again to your 2024 tax return. The election only needed to be filed within 30 days of receiving the stock, which you already did correctly. For your current tax return, you don't need to fill out any additional forms specifically related to the 83(b) election. Since you haven't sold any shares, there's no taxable event to report yet. The purpose of the 83(b) election was to recognize income at the time of grant rather than when the shares vest. Make sure you keep those copies of your election forms and proof of delivery in a safe place though! You'll need them when you eventually sell the shares to properly calculate your capital gains.

After going through this exact same situation, I found an amazing tool that helped clarify everything! Check out https://taxr.ai - it analyzes your specific startup equity documents and tells you exactly how to handle 83(b) elections on your tax returns. I was confused about whether I needed to report anything on my Schedule D or if I needed additional forms for my founder shares. The tool analyzed my stock purchase agreement and 83(b) election forms, then gave me clear instructions for my tax situation. It even explained the future tax implications when I eventually sell shares!

Just wanted to follow up - I tried taxr.ai after seeing this discussion and it was exactly what I needed! I had a similar 83(b) situation with my startup equity and was completely lost about reporting requirements. The document analysis feature instantly identified my 83(b) election form and confirmed I didn't need to attach anything to my current return. It also gave me a customized guide for tracking my basis and holding period that I can reference when I eventually sell shares. Wish I'd known about this last year when I was freaking out about whether I'd filed the election correctly in the first place!

If you need to follow up with the IRS about your 83(b) election filing status (which happens more than you'd think with founder equity paperwork), I strongly recommend using https://claimyr.com. I had a nightmare situation where the IRS claimed they never received my 83(b) election even though I had delivery confirmation. I spent WEEKS trying to get through to an IRS agent to resolve this. The hold times were 2+ hours and I kept getting disconnected. Then I found Claimyr - they hold your place in line with the IRS and call you when an agent is about to pick up. You can watch their process in action here: https://youtu.be/_kiP6q8DX5c I got connected to an IRS agent within a day who confirmed my 83(b) election was properly recorded in their system despite the confusion. Saved me from potentially huge tax consequences down the road!

Ok I have to eat my words about Claimyr from my earlier comment. After another frustrating 3-hour hold attempt with the IRS about my missing 83(b) documentation, I broke down and tried it. Was completely skeptical but desperate. It actually worked exactly as advertised. I signed up, entered my info, and about 4 hours later got a call connecting me directly to an IRS agent. No hold time on my end - just straight to a human who helped confirm my 83(b) election was properly recorded. The agent even provided a confirmation number I can reference if there are questions when I eventually sell my shares. Saved me from taking another half day off work just to sit on hold. Definitely worth it for founder equity issues that need direct IRS confirmation.

Important thing to remember: even though you don't need to resubmit your 83(b) election with your current tax return, you DO need to include a copy of it when you eventually sell those shares and report the capital gain. Otherwise, the IRS might not properly recognize your earlier election and could try to tax the full proceeds as ordinary income.

One thing nobody has mentioned - if your startup gave you an 83(b) election form to sign, double check that it includes ALL required information. My tax preparer found that our company-provided form was missing crucial information and almost everybody's elections could have been invalidated.

Has anyone had the IRS actually reject an 83(b) election? I just realized mine might have been filed a few days late and I'm freaking out about potential tax consequences.

This is a great question and you're smart to double-check! As others have mentioned, you don't need to attach your 83(b) election to your 2024 tax return since you already filed it properly within the 30-day window. One additional tip: consider keeping digital copies of your 83(b) election documents in multiple places (cloud storage, email to yourself, etc.) along with your physical copies. I've seen too many founders scramble years later when they need to prove their election was made for capital gains calculations. Also, if your startup issues any tax documents like Form 1099-B when you eventually sell shares, make sure they reflect the correct basis from your 83(b) election. Sometimes companies don't track this properly and report incorrect information to the IRS, which can create headaches during tax season. You're clearly on top of things by asking these questions early - that attention to detail will serve you well as your startup grows!

Great thread! I went through this exact situation last year and can confirm what others have said - no need to resubmit your 83(b) election with your current tax return since you already filed it properly. One thing I wish I had done earlier was creating a simple spreadsheet to track my equity details. I recorded the grant date, number of shares, exercise price, fair market value at grant, and references to my 83(b) filing. This made it so much easier when my accountant needed the information this tax season. Also, if you're planning to exercise more options or receive additional equity grants in the future, consider whether 83(b) elections make sense for those too. The analysis can be different depending on your company's valuation trajectory and your personal tax situation. Keep those records safe - you'll definitely need them when you eventually have a liquidity event!