83(b) election and QSBS: when the holding period starts
How an 83(b) election moves the Section 1202 and long-term capital gain clock to the transfer date, with a five-year example.
Summary
Our answer: for restricted stock of a C corporation, the 83(b) election is the only way to start the holding period at the transfer date rather than at each vesting date. Treas. Reg. 1.83-4(a) says the holding period of restricted property begins just after it vests, unless an 83(b) election was made, in which case it begins just after the transfer. Since the July 4, 2025 law (P.L. 119-21), Section 1202 excludes 50% of the gain after 3 years, 75% after 4 and 100% after 5 for stock acquired after that date. Miss the 30-day window and each vesting tranche starts its own clock. Whether to elect is your decision, ideally with your lawyer or CPA.
With an 83(b) election, the holding period starts just after the transfer date (Treas. Reg. 1.83-4(a)); QSBS acquired after July 4, 2025: 50% / 75% / 100% exclusion at 3 / 4 / 5 years (IRC 1202(a)(5)).
| Holding period with 83(b) | Begins just after the transferTreas. Reg. 1.83-4(a). |
|---|---|
| Holding period without | Begins just after each tranche vestsIRC 83(f); Treas. Reg. 1.83-4(a). |
| QSBS exclusion (acquired after July 4, 2025) | 50% at 3 years, 75% at 4, 100% at 5IRC 1202(a)(5), added by P.L. 119-21. |
| Per-issuer limit | $15,000,000 (post-July 4, 2025 stock)Or 10 times basis if greater; $10,000,000 for older stock (IRC 1202(b)). |
| Gross assets test | $75,000,000IRC 1202(d)(1) as amended in 2025. |
Our answer in short
For restricted stock of a C corporation, the holding period that QSBS counts starts at the transfer only if an 83(b) election is made within 30 days of the transfer; nothing later can move it back. At a $0 spread the election reports no income. Whether to elect, and whether your shares qualify as QSBS (business type, assets, original issue), are questions for you and your lawyer or CPA; our packet only prepares the filing once you have decided.
Who this page is for, and who it is not for
For: founders and early employees receiving restricted stock or early-exercising options in a C corporation. Not for: RSU holders (no 83(b) possible), LLC or S corporation owners (no QSBS), and anyone past the 30-day window.
Example: one founder, two outcomes
A founder receives 3,000,000 restricted shares of a Delaware C corporation, transferred on January 15, 2026, pays their full value, and vests over four years with a one-year cliff. With an 83(b) election filed within the 30-day window, the holding period of all 3,000,000 shares starts January 16, 2026. Without it, 750,000 shares start their clock on January 15, 2027 and the rest month by month until January 2030.
| Exclusion | With 83(b) (all shares) | Without 83(b), first tranche | Without 83(b), last tranche |
|---|---|---|---|
| 50% (3 years) | January 2029 | January 2030 | January 2033 |
| 75% (4 years) | January 2030 | January 2031 | January 2034 |
| 100% (5 years) | January 2031 | January 2032 | January 2035 |
Percentages: IRC 1202(a)(5) for stock acquired after July 4, 2025. Dates are rounded to the month for the example.
What changed in 2025
Before the July 4, 2025 law, QSBS required a holding period of more than five years. For stock acquired after that date, Section 1202(a)(5) now gives a 50% exclusion after three years and 75% after four, with 100% after five. The per-issuer limit is $15,000,000 for that stock (or 10 times basis if greater), indexed after 2026, and the gross assets test rose from $50,000,000 to $75,000,000.
What our packet does and does not do
83(b) Election Desk prepares Form 15620, the company copy letter and the proof-of-mailing checklist for $49. It does not decide whether your stock qualifies as QSBS, compute the exclusion or plan a sale.
Next steps
83(b) explained: when it is worth filing
The tax-now versus tax-at-vesting trade-off with numbers.
83(b) for restricted stock
The supported founder-stock lane.
Delaware startups: authorized shares and franchise tax
Why the same founder share count can produce a large Delaware bill, and how to recalculate it.
Common questions
Does an 83(b) election start the QSBS holding period?
It starts the holding period of the shares just after the transfer date (Treas. Reg. 1.83-4(a)), and Section 1202(a)(6)(B) measures when QSBS was acquired using the holding-period rules of Section 1223. Whether the shares are QSBS at all depends on Section 1202's other tests.
What happens to QSBS if I did not file an 83(b)?
Each tranche is treated as acquired when it vests, so each has its own 3-, 4- and 5-year dates. On a four-year vesting schedule, the last tranche can reach five years roughly four years later than it would have with an election.
Can an LLC member use this?
Not for QSBS. Section 1202(c)(1) covers stock in a C corporation. Profits interests in an LLC are a separate question; see our profits-interest page.
Does the 83(b) election make my shares QSBS?
No. It only moves the start of the holding period. QSBS also requires original issue by a C corporation that meets the $75,000,000 gross assets test and runs a qualified business; health, law, consulting, financial services and other fields are excluded (IRC 1202(c), (d), (e)).
Already decided? Prepare the packet within 30 days
Form 15620 fields, the company copy letter and proof of mailing for founder stock. QSBS qualification itself is a question for your lawyer or CPA.
Open checkerRelated guides
83(b) election deadline calculator
A source-linked deadline guide for people who already decided to file a Section 83(b) election and need an operational packet before the 30-day window closes.
Form 15620 for a Section 83(b) election
A practical guide to the IRS Form 15620 fields used in a Section 83(b) election packet.
83(b) election for restricted stock packet
How the MVP handles a simple individual restricted-stock grant after the user has already decided to make the election.
Official sources for this guide
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