83(b): Restricted Stock Awards and Your Taxes

FACT #1: Stock options can lose most or all of their value if the underlying stock goes down in price.

FACT #2: In contrast, restricted stock awards retain significant value as long as the underlying stock has appreciated.

So what does the tax law have to do with these facts?

Plenty. There are important federal and employment tax consequences concerning restricted stock.

You’ll get the whole story when you read my new article titled Tax Tips: Restricted Stock Awards and Your Taxes.

We’ll explain restricted stock basics. In a typical restricted stock arrangement, an executive (you) receives company stock subject to one or more restrictions. The most common limitation is a requirement that you continue employment through a designated date. We’ll explain all the tax consequences when you read the full article.
We’ll show you how to weigh the tax benefits of making a section 83(b) election. If you don’t make a Section 83(b) election, you don’t pay taxes. If you do make a Section 83(b) election, you are taxed on the restricted stock’s date-of-award value (even though ownership has not yet vested), minus the amount you paid (if anything) for the stock. You’ll get all the details when you read the full article.
We’ll explain the tax requirements for restricted stock treatment and more including…
- When you’re subject to the substantial risk of forfeiture
- Why you should make sure that you meet the non-transferable requirement
- When you have to recognize taxable income
- What happens if you don’t make the Section 83(b) election
- What happens if you do make the Section 83(b) election
- How the table we’ve included makes the election choice a lot clearer
- We’ll explain the employer’s compensation deduction
- And lots more

We’ll explain everything in easy-to-understand language when you read the full article.