An individual who is compensated with stock or other property in connection with the performance of services typically must include as income the difference between the fair market value and the amount paid for the property. The year of inclusion is the tax year where the Taxpayer’s rights in the property is transferable or not subject to a substantial risk of forfeiture.
Often times, however, an 83(b) election will be made by Taxpayers which allows for the inclusion of income of the fair market value of the property at the time of transfer. If a Taxpayer wants to take advantage of this election, he or she must file the 83(b) Election with the IRS no later than 30 days after the date on which the property is transferred to the Taxpayer. Additionally, the Taxpayer was also required to attach and submit a copy of the election with their income tax return for the applicable taxable period.
The IRS has now issued final regulations which eliminate the need to attach a copy of the 83(b) election to the Taxpayer’s income tax return. The new regulations are applicable for property transferred on or after January 1, 2016 and the election must still be filed with the IRS no later than 30 days after the date that the property was transferred to the Taxpayer.
If you have questions or comments, please contact Mike Weber at 412-338-9300.
