Syndicate Legal Advisory Services prepares the complete set of documents required for a founder, employee, director, advisor, consultant, or other service provider who receives stock, LLC units, or other equity subject to vesting to make an election under Section 83(b) of the Internal Revenue Code — the election that lets the recipient be taxed on the equity’s value at the time of grant, when it is typically nominal, rather than on its appreciated value at each vesting date — together with the supporting valuation, the corporate records, and the confirmation of timely filing. The election must be filed with the IRS within thirty days after the equity is transferred, the deadline cannot be extended, and a missed or defective election cannot be cured; for a founder of a company that later succeeds, the difference between a timely election and a missed one can be the difference between a nominal tax at grant and ordinary income on millions of dollars of appreciation as the shares vest. Working from the grant documents and the client’s information, we prepare the election, the filing package, and the records, and we coordinate the filing so that the deadline is met and proven. Postage, delivery-service, and other third-party charges are not included in the flat fee and are the sole responsibility of the client.
Scope of work includes:
Eligibility and timing analysis — a written summary confirming that the equity is “property” transferred in connection with the performance of services and subject to a substantial risk of forfeiture (so that an election is available and useful), the transfer date from which the thirty-day period runs (the grant or purchase date, not the date of board approval or the date the certificate is delivered), the deadline, whether the equity is stock of a corporation, units or a profits interest in an LLC or partnership (for which the election is made as a protective matter under the IRS’s safe-harbor guidance), or another form, the fair market value at transfer and the amount paid, and therefore the amount of income the election will cause the recipient to recognize at grant; and a plain-language statement of the consequences of making the election (tax now on the spread, no deduction if the equity is later forfeited, and the start of the capital-gain and qualified-small-business-stock holding periods) and of not making it (ordinary income at each vesting date on the then-current value), so the recipient can decide with the advice of a tax adviser.
Review of the grant documents — review of the restricted stock agreement, founder stock purchase agreement, restricted unit or profits-interest agreement, equity incentive plan, and board or manager approvals, to confirm the transfer date, the number of shares or units, the purchase price, the vesting and forfeiture terms, and the fair market value the corporation has determined, with a written note of any inconsistency between the documents that should be corrected before the election is filed.
Valuation support — the documentation of the fair market value at transfer that supports the amount stated in the election: the board’s valuation determination, the most recent independent valuation or the price of the most recent financing, or, for a newly formed company with no assets, the par-value or nominal-value basis, with the caveat that the firm does not itself appraise and that a valuation report is arranged separately where the company’s circumstances require one.
Section 83(b) election statement — preparation of the election in the form the IRS prescribes (Form 15620 where the taxpayer elects to use it, or the written statement meeting the regulatory content requirements), stating the taxpayer’s name, address, and taxpayer identification number; the description of the property; the date of transfer and the taxable year; the nature of the restrictions; the fair market value at transfer determined without regard to lapse restrictions; the amount paid; the amount to be included in gross income; and the statement that a copy has been furnished to the person for whom the services are performed; with the taxpayer’s signature and date.
Filing package — the cover letter to the IRS service center with jurisdiction over the taxpayer’s return, the duplicate copy for the IRS to date-stamp and return with the self-addressed stamped envelope, the copy for delivery to the corporation or LLC, the copy for the taxpayer’s records, and the filing instructions specifying the mailing method that proves timely filing (certified mail with return receipt, or a designated private delivery service) and the proof-of-mailing procedure; where the IRS’s electronic filing option is available, the electronic filing package and the confirmation procedure.
Filing coordination and confirmation — the calendaring of the thirty-day deadline from the transfer date, the coordination of the taxpayer’s signature and mailing within the window, the retention of the certified-mail receipt, the return receipt, and the date-stamped copy when returned, and the written confirmation of timely filing for the taxpayer’s and the company’s records.
Company records and reporting documentation — the delivery of the election copy to the company and its entry in the company’s equity records against the grant, the company’s acknowledgment of receipt, the withholding and reporting documentation for the income recognized at grant (Form W-2 treatment for an employee or Form 1099 treatment for a non-employee, with the withholding mechanics where the spread is more than nominal), the capitalization-table notation that the election was made, and the record the company will need to respond to a later IRS inquiry or a diligence request in a financing or sale.
Spousal and multi-grant documentation — the spousal consent or joinder where community-property rules apply, and, for a company issuing equity to several founders or recipients at once, the coordinated set of elections and filing packages with a single tracking schedule.
Post-filing records and toolkit — the election file containing the signed election, the proof of mailing and receipt, and the company acknowledgment; the compliance calendar entries the election creates (the inclusion of the recognized income on the taxpayer’s return for the year of transfer, the capital-gain and QSBS holding-period dates, and the vesting dates at which no further income is recognized); and a one-page summary for the taxpayer of what was elected, what was reported, and what to keep.
Deliverable: a complete, indexed election file (electronic and hard copy) containing the eligibility and timing summary, the grant-document review note, the valuation support, the executed Section 83(b) election, the filing package and proof of timely filing, the company acknowledgment and records, the spousal consent where applicable, and the compliance calendar, with a signature-ready election for execution by the taxpayer.