By Joni Lindquist
The IRS recently acted upon feedback from taxpayers seeking an easier way to pay tax at grant. This method requires a Section 83(b) filing. To make an 83(b) election on restricted stock, the individual must notify the local IRS office within 30 days of the grant date. Note that Section 83(b) is NOT available for restricted stock units.
Previously, the IRS required filing a copy of the Section 83(b) with the taxpayer’s return. Since many software systems did not allow this, it made electronic filing very problematic for those implementing a Section 83(b).
On July 25, 2016 the IRS issued final regulations that end the requirement of filing the election with the taxpayer’s return. The IRS will save a copy of the taxpayer’s original election and no longer requires this second submission with the tax return.
The final regulations emphasize that employees with restricted stock have an ongoing responsibility to keep accurate records on their shares as long as needed, in particularly the original cost basis of the stock.
We advise that taxpayers work with their financial planner and accountant to follow an appropriate strategy with restricted stock and restricted stock units for their specific situation. For questions about this affects you, schedule a meeting by clicking below, contact Joni Lindquist –jlindquist@makinglifecount.com, or call (913) 345-1881.