Skip to content
  • Home
  • Services
    • Audit & Attest
      • Financial Statement Audits
      • Employee Benefit Plans
      • Attestation Engagements
      • Compilations & Review
      • SOC
      • Agreed-Upon Procedures
    • Advisory
      • Transaction Advisory Services
      • Cybersecurity, Technology Risk, Privacy
      • High Net Worth Services
      • Forensic Services
      • Litigation Services
      • Management Consulting
      • Technology Services
      • Valuation Services
    • Business & Tax
      • Corporate Income Tax
      • Individual Income Tax
      • International Tax
      • State and Local Tax Compliance and Tax Minimization Services
      • Tax Planning
    • T&C Family Office Group
  • Industries
    • Car Wash
    • Construction & Real Estate
    • Government
    • Healthcare
    • Manufacturing & Distribution
    • Nonprofit Organizations
    • Privately-held Companies
    • Professional Services
    • Technology
  • Firm
    • Overview
    • Our People
    • Our Community
    • Templeton Group
      • PracticePro 365
      • T&C Family Office Group
      • Templeton Investigative Services
  • Careers
    • Experienced
    • Students
    • Benefits
  • Pay My Bill
Menu
  • Home
  • Services
    • Audit & Attest
      • Financial Statement Audits
      • Employee Benefit Plans
      • Attestation Engagements
      • Compilations & Review
      • SOC
      • Agreed-Upon Procedures
    • Advisory
      • Transaction Advisory Services
      • Cybersecurity, Technology Risk, Privacy
      • High Net Worth Services
      • Forensic Services
      • Litigation Services
      • Management Consulting
      • Technology Services
      • Valuation Services
    • Business & Tax
      • Corporate Income Tax
      • Individual Income Tax
      • International Tax
      • State and Local Tax Compliance and Tax Minimization Services
      • Tax Planning
    • T&C Family Office Group
  • Industries
    • Car Wash
    • Construction & Real Estate
    • Government
    • Healthcare
    • Manufacturing & Distribution
    • Nonprofit Organizations
    • Privately-held Companies
    • Professional Services
    • Technology
  • Firm
    • Overview
    • Our People
    • Our Community
    • Templeton Group
      • PracticePro 365
      • T&C Family Office Group
      • Templeton Investigative Services
  • Careers
    • Experienced
    • Students
    • Benefits
  • Pay My Bill
CONTACT US

Taxpayers No Longer Need to Attach Copy of Section 83(b) Election to Form 1040

  • Uncategorized

Home » Taxpayers No Longer Need to Attach Copy of Section 83(b) Election to Form 1040

Summary

The IRS finalized regulations on July 25, 2016, adopting the  2015 proposed regulations, without change, that eliminate the requirement to file a copy of an 83(b) election with an individual’s income tax return for the year.  An 83(b) election allows the taxpayer to report as income when nonvested property is transferred in connection with the performance of services rather than when the property becomes substantially vested as provided under Section 83(a).

There are both pros and cons to making an 83(b) election that should be discussed with your tax advisor prior to making such an election.

The final regulations apply to property transferred on or after January 1, 2016.  For transfers of property on or after January 1, 2015, and before January 1, 2016, taxpayers may rely on the guidance in the proposed regulations, which is identical to the guidance contained the final regulations.

Details

When property is transferred to a taxpayer in connection with the performance of services, Section 83(a) generally requires inclusion of the excess of the fair market value of the property over the amount paid for the property in the year in which the taxpayer’s rights in the property are transferable or are not subject to a substantial risk of forfeiture.

Under Section 83(c)(1) and regulations thereunder, a substantial risk of forfeiture  exists if the full enjoyment of the property is conditioned on the future performance of substantial services or  the occurrence of a condition  that provides a substantial  possibility of forfeiture.  Property often increases in value between the transfer date and the time when there is no longer a substantial risk of forfeiture, resulting in an increased amount taxed as ordinary income.

As an alternative to delaying the taxation until there is no longer a substantial risk of forfeiture, Section 83(b)(1) allows the  person who performs services in connection with which property is transferred to elect inclusion of the excess fair market value of the property over the amount paid for it in gross income for the tax year of the transfer.

Prior to these new regulations, an 83(b) election was made by filing a written statement within 30 days of the transfer date with the IRS office with which the taxpayer’s return would be filed (a copy was also furnished to the service recipient).  An additional copy of the statement had to be submitted with the taxpayer’s income tax return for the year of transfer.  The requirement to attach a copy of the 83(b) election with the taxpayer’s income tax year proved to be an impediment to IRS’s preferred electronic filing.  The final regulations eliminate the requirement to attach a copy to the taxpayer’s income tax return.  Generally, a copy of any Section 83(b) election must be kept until the period of limitations expires (generally, three years from the due date of the return) for the return that reports the sale or other disposition of the property.

Insights

Taxpayers are not relieved of their general recordkeeping responsibilities under Section 6001 and accordingly must keep sufficient records to support the original cost of the property and the tax treatment as reported on their income tax returns.

Copyright © 2016 BDO USA, LLP. All rights reserved. www.bdo.com

Categories
  • Agribusiness
  • Assurance, Advisory & Review
  • Blog
  • Business Consulting & Corporate Compliance
  • Current Opportunities
  • Employee Benefit Plans / 401(k)
  • Healthcare
  • High Net Worth Individuals
  • Manufacturing & Distribution
  • Newsletter Articles
  • Newsletters
  • Nonprofit
  • Press Releases
  • Privately Held Companies
  • Professional Services
  • Real Estate & Construction
  • Retail
  • Specialty Tax Services
  • T&C Family Office Group
  • Tax Planning & Compliance
  • Technology
  • Uncategorized
  • Valuation Services

SHARE THIS ON:

RELATED POSTS

GASB Statement No. 101, Compensated Absences

In June 2022, the Governmental Accounting Standards Board (GASB) issued GASB Statement No. 101, Compensated Absences (GASBS 101 or Statement). The Statement updates the accounting

Read More »

A Closer Look at IRC Section 1031 Exchanges

By John Chenoweth, CPA What is an IRC Section 1031 Exchange? An IRC Sec. 1031 like-kind exchange is an effective method for investors to defer

Read More »

Steve Templeton Named Power Leader by South Florida Business Journal

West Palm Beach, Fla., February 7, 2023 – Steve Templeton, Founder and Managing Partner of Templeton & Company, was named a Power Leader in the

Read More »

Contact Us

WEST PALM BEACH
Esperante Building
222 Lakeview Avenue
Suite 1200
West Palm Beach, FL 33401
(561) 798-9988
Fax: (561) 798-4053

FORT LAUDERDALE
The Main
201 East Las Olas Boulevard
Suite 1650
Fort Lauderdale, FL 33301
(954) 333-0001
Fax: (954) 765-0719

Twitter Facebook Instagram Youtube Linkedin
© 2023 Templeton & Company. All Rights Reserved. Website by Weber & Co.
Services
  • Audit & Attest
  • Advisory
  • Business & Tax
  • T&C Family Office Group
  • Pay My Bill
  • Audit & Attest
  • Advisory
  • Business & Tax
  • T&C Family Office Group
  • Pay My Bill
Industries
  • Car Wash
  • Construction & Real Estate
  • Government
  • Healthcare
  • Manufacturing & Distribution
  • Nonprofit Organizations
  • Privately-held Companies
  • Professional Services
  • Technology
  • Car Wash
  • Construction & Real Estate
  • Government
  • Healthcare
  • Manufacturing & Distribution
  • Nonprofit Organizations
  • Privately-held Companies
  • Professional Services
  • Technology
Firm
  • Overview
  • Our People
  • Our Community
  • Templeton Group
  • Overview
  • Our People
  • Our Community
  • Templeton Group
Careers
  • Experienced
  • Students
  • Benefits
  • Experienced
  • Students
  • Benefits
Cleantalk Pixel