Final IRS Regulations Simplify Section 83(b) Filing Requirements

On July 25, 2016 the Internal Revenue Service issued final regulations that eliminate the need for taxpayers to attach a copy of an 83(b) election to their federal income tax returns for the year in which the property subject to the election was transferred, thus clearing the way for such taxpayers to file their income tax returns electronically. (Despite encouraging taxpayers to e-file, the IRS previously didn’t allow taxpayers to attach a copy an 83(b) election to an electronically filed return.)

To be clear, taxpayers still need to file with the IRS a paper copy of their 83(b) election within the applicable 30-day deadline. Taxpayers should keep a copy of the election for at least eight years after disposing of the property to which the election relates (to cover both the standard 3-year and extended 6-year and 7-year statutes of limitations).

The final regulations apply to property transferred on or after January 1, 2016, but taxpayers already were permitted to rely on identical, previously proposed regulations for transfers on or after January 1, 2015.

Robert Murphy