Section 83(b) Election: 30-Day Deadline, Filing, and California Rules

To make a Section 83(b) election in California, mail a signed copy of your federal election statement to both the IRS and the California Franchise Tax Board within 30 days of receiving the restricted stock or early-exercised shares. There is no separate California form, and despite occasional references to an “FTB 4963,” the FTB does not publish one. The state simply accepts a duplicate of the federal statement you send to the IRS.

The 30-day deadline is absolute. Miss it and the election is gone, with consequences that often run into the thousands of dollars.

What the Election Does

When you receive restricted stock as compensation, the default rule under IRC Section 83(a) is that you owe ordinary income tax each time a batch vests, based on the fair market value on the vesting date minus whatever you paid.¹ If the stock appreciates during the vesting period, you pay ordinary rates on all of that appreciation.

An 83(b) election flips the timing. You tell the IRS and the FTB that you want to recognize the income now, at the grant date, on the current value. Future appreciation is then treated as capital gain when you eventually sell.² The strategy shines when the stock’s current value is very low, as is typical with early-stage startup equity. Paying ordinary tax on pennies today, then converting all later growth into long-term capital gain, is the whole point.

California conforms to the federal rules on restricted property through Revenue and Taxation Code Section 17081, which incorporates Section 83 of the Internal Revenue Code.³ That’s why the same statement works for both filings.

What Qualifies, and What Doesn’t

The election is available for restricted stock and for stock options you early-exercise before vesting. With restricted stock, you own the shares on the grant date even though they can be forfeited if you leave. With early-exercised options, you’ve purchased unvested shares that remain subject to a forfeiture risk until they vest, which makes them eligible. The 30-day clock on an early exercise runs from the exercise date, not the original option grant date.⁴

Restricted stock units (RSUs) are not eligible. With an RSU, no property has been transferred to you at grant; you own nothing until vesting. There is nothing to elect on.

The 30-Day Deadline

The election must reach the IRS no later than 30 days after the date the property was transferred to you.² For restricted stock, that’s the grant date. For early exercises, it’s the exercise date. The California copy should go out within the same 30-day window.

Neither the IRS nor the FTB has authority to grant extensions or accept late filings. If day 30 passes without a postmark, the default rules apply, and you’ll owe ordinary income tax on the full spread at each vesting date.

The election is also irrevocable once filed, except in rare cases where the Secretary of the Treasury consents through a private letter ruling.² Think the decision through before mailing.

What the Election Statement Must Contain

You have two options. The IRS now publishes Form 15620, Section 83(b) Election, which walks you through each required field. Alternatively, you can draft your own written statement that satisfies Treasury Regulation Section 1.83-2.⁴ Either is accepted.

Whichever route you take, the election must include:⁵

Your full legal name, current address, and taxpayer identification number.
A description of the property, including the number and class of shares.
The date the property was transferred and the taxable year of the election.
The nature of the restrictions, such as the vesting schedule and any repurchase rights.
The fair market value of the property at the time of transfer, determined without regard to any restrictions that will lapse.
The amount you paid for the property. If you paid nothing, state zero.
A statement confirming that copies have been provided to the required parties, such as your employer.

The statement must be signed and must indicate it is being made under Section 83(b) of the Internal Revenue Code. Keep a signed copy for your records.

Where to Mail Each Copy

The filing goes to three places within the 30-day window: the IRS, the FTB, and your employer.

IRS

Mail Form 15620 or your written statement to the IRS office where you file your federal income tax return. The IRS does not currently accept electronic filing for 83(b) elections.⁴ Use certified mail with return receipt requested. It isn’t technically required, but it is the only reliable way to prove you met the deadline if the filing is ever questioned.

California FTB

Send a copy of the same signed statement to:

Franchise Tax Board
PO Box 942840
Sacramento, CA 94240-0040⁶

Use certified mail for this one too. The FTB publishes no dedicated form; the federal statement is all that’s required.

Employer

Provide a signed copy to the company that granted the stock. The treasury regulations require this, and your employer needs it to report the income correctly on your W-2.⁵

Tax Consequences After You File

The spread between the fair market value on the transfer date and what you paid is included in your gross income as ordinary compensation for that year.² It appears on your W-2 and is subject to federal and California income tax, Social Security, and Medicare taxes.

The amount you recognize becomes part of your cost basis in the shares. Your holding period for capital gains purposes also starts on the transfer date, not on vesting. If you hold the shares more than a year from that date before selling, appreciation above basis qualifies for long-term capital gains rates, which for 2026 are 0%, 15%, or 20% federally depending on income.⁷

Without the election, the full vesting-date spread is taxed at ordinary rates. The top federal rate is 37% for 2026, and California’s top rate reaches 13.3% on income over $1 million.⁷ The gap between those rates and long-term capital gains rates is where the real money is made or lost.

When the Election Can Hurt You

The downside is genuine. If you file, pay tax on the stock’s current value, and then the stock drops or becomes worthless, you’ve paid tax on income you never actually realized. If you leave the company before vesting and forfeit the shares, no deduction is allowed for the income you previously recognized.² That tax is simply gone.

This risk is manageable when the fair market value at grant is very low. Losing $50 of upfront tax on an early-startup grant is not catastrophic. The calculation changes if the stock is already worth real money at the transfer date, because you’re writing a much larger check on faith that the shares will hold their value and that you’ll stay long enough to vest.

California Residency and Allocation

California can tax equity compensation income based on where you performed the services, not just where you live when the shares vest. Under the default rules, the FTB allocates vesting-date income using the ratio of California workdays to total workdays between grant and vesting.⁸ If you worked in California for two of four vesting years, roughly half the vesting income is allocated to the state.

An 83(b) election collapses that allocation to a single point. Because the income is recognized at the grant date, where you were working at that moment largely determines how much California can tax. If you were a California resident working in the state at grant, California taxes the full recognized amount in that year, and you avoid year-by-year allocation at each future vesting date. That can be valuable if you expect to relocate.

Nonresidents who performed services partly in California still allocate equity compensation income to the state based on the California-workday ratio, whether or not they file an 83(b) election.⁸ The election changes when income is recognized; it does not erase California’s claim on income earned from work performed in the state.

1
eCFR. 26 CFR 1.83-1 – Property Transferred in Connection With the Performance of Services
2
Office of the Law Revision Counsel. 26 USC 83 – Property Transferred in Connection With Performance of Services
3
California Legislative Information. California Revenue and Taxation Code 17081
4
Internal Revenue Service. Instructions for Form 15620 – Section 83(b) Election
5
eCFR. 26 CFR 1.83-2 – Election to Include in Gross Income in Year of Transfer
6
State of California Franchise Tax Board. Mailing Addresses
7
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
8
Franchise Tax Board. FTB Publication 1004 – Equity-Based Compensation Guidelines