In October 2024, the Internal Revenue Service (IRS) released instructions and fillable versions of new Form 15620.
This form is used to report Section 83(b) Elections and is designed to make filing consistent across taxpayers. Taxpayers and tax preparers may file the new form electronically or by mail. The form standardizes the model letter set forth in Rev. Proc. 2012-29 and follows the rules established in Reg. §1.83-2(e).
When a substantially nonvested property is transferred to a person as a result of services performed, that person may elect under Internal Revenue Code (IRC) § 83(b) to include in their current gross income the excess of the property’s FMV at the time of the transfer over the amount paid for the property at the time of transfer. The election is made at the time of transfer rather than waiting to include the amount when the property later becomes substantially vested. It is crucial to note that unlike other elections such as an IRC §754 election, there is no extension of time to file a §83(b) election. The election must be filed within 30 days of the transfer of the property.
It is important that taxpayers and those transferring substantially nonvested property to be aware of the new form and clarify who in the transfer process will be responsible for the filing. Please contact any member of our Schneider Downs tax practice with questions and how we can help you navigate the new filing requirement.
About Schneider Downs Tax Services
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