83(b) election risks

The election is irrevocable and can cost real money in the scenarios that people quietly assume will not happen.

You leave before vesting

Tax paid on forfeited shares is not refundable, and the loss is a capital loss at best.

The company fails

You have prepaid tax on a worthless asset.

The spread is already large

If the FMV materially exceeds what you pay, the election creates an immediate cash tax bill on illiquid stock. That is when the maths usually stops working.

This article is educational and not tax, legal, or financial advice. Talk to a CPA or tax advisor about your specific situation.

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