IRS Finalizes Regulations Simplifying 83(b) Filing Requirements

On July 23^rd of last year, I blogged on a set of proposed regulations eliminating the requirement that a taxpayer attach a copy of his or her Section 83(b) election to their individual tax return.  This July, the IRS made the proposed rule final and the final regulations eliminate the requirement that a taxpayer attach a copy of their Section 83(b) election to their tax return for the year in which the restricted property was transferred. This change should be welcomed by taxpayers who file electronic federal tax returns because commercial software does not consistently allow taxpayers to attach a copy of the Section 83(b) election to an electronically filed return.

Importantly, these final regulations also remind taxpayers of their tax-related recordkeeping responsibilities, including the requirement to maintain records to show the taxpayer’s original cost of the restricted property and the taxpayer’s responsibility to retain a copy of their Section 83(b) election until the applicable statute of limitations expires.