The following is not meant to be legal advice.
Restricted stocks are taxed based on the value of the property at the time a restriction lapses. Restricted stock prices need only be at least the par value or based on corporate rules, stock plans, and federal and state laws.
A Section 83(b) election under the IRC is usually made by people at private companies. With public companies, when a person forfeits restricted shares, the person does not get credit for the taxes paid. For example, a person who has paid taxes under a Section 83(b) election, is not able to get credit for the taxes paid if he loses his job or quits his job prior to vesting the shares.
Under Section 83(b), the service provider can choose to be taxed now at the value of the property at the time of grant, or at the time that the restrictions lapse. If the individual pays taxes now, he/she does not pay ordinary income taxes at the time the restrictions lapse. Though, he/she still pays capital gains taxes. Someone may want to make a Section 83(b) election when he/she believes that the ordinary income taxes will be higher than the long term capital gains taxes.
The Section 83(b) election must be filed with the IRS within 30 days of purchase or option exercise. It is unlikely the IRS will give any relief from the 30 days deadline.
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