The IRS has recently introduced Form 15620 for taxpayers to make a Section 83(b) election. This form simplifies the election process for taxpayers who receive restricted property, like stock options, in exchange for their services. This eases the election filing requirements since the new form is in PDF format.
What is a Section 83(b) Election?
Section 83(b) is a provision under the Internal Revenue Code (IRC) that allows taxpayers receiving property for services to include the fair market value of property in income when it is received rather than when it vests. By making this election, any future increase in value will not be part of the taxpayer’s compensation. The election is beneficial if the value of the restricted stock or other property is likely to increase in value. The basis for figuring the gain or loss when the taxpayer sells the property is the amount paid for it plus the amount included in income. A Section 83(b) election is usually irrevocable, and specific requirements must be satisfied for the election to be valid.
When do I need to file?
An 83(b) election must be filed within 30 days after the date the property was transferred.
Where to File
Submit the completed and signed Form 15620 to the Internal Revenue Service (IRS) via mail to the IRS office location where the taxpayer usually files his or her federal income tax return. The taxpayer must also submit a copy of the election to the employer that transferred the property for services.
Key components of Form 15620
Here are the main components of the form:
- Taxpayer Information: Includes the taxpayer’s name, Tax Identification Number (TIN), and address.
- Property Description: Details about the property, including its fair market value and any amount paid for it.
- Transfer Date: The date the property was transferred.
- Service Recipient Information: Information about the person or entity for whom the taxpayer is providing services in connection with the property transfer.
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