You probably shouldn't early exercise, which makes the question of 83b moot.

You are investing a couple years of your life in this. That's probably investing a couple hundred thousand dollars of opportunity cost vs a job at large tech company.

You have plenty invested. You'll do well if they do well. Spend your liquid investments in something diversified.

- sincerely, a moderately lucky person who has joined 3 companies before employee 15

It depends entirely on the cost to purchase. If it's a fraction of the opportunity cost you're probably crazy not to early exercise.

There are major benefits beyond tax savings. If you quit before a liquidity event you can easily keep the vested equity without worrying about paying taxes on unrealized gain.

At anything other than really-low-valuation-seed-stage, the cost to purchase is going to be material. Since 409(a) is basically just 1/5th of the last valuation, at $5mil valuation, 1.0% equity will cost you $10k to exercise. If you can burn $10k without thinking about it on startup salary, this advice isn't for you.

If you wait, you get substantially more information. A company that makes it to a Series A has a much higher chance of succeeding, and you'll typically know that in your typical tenure of 1-3 years as a junior dev.

If you want to spend $10k cash on buying startup equity, at least call yourself an angel investor and go find a company that's willing to issue you a note that converts to preferred stock. It's too easy for a company to have a couple of missteps and wipe out most of the common stock value, even much later.

It's strange to worry about a $10k investment while we're both acknowledging the investment by way of accepting a below market salary is an order of magnitude higher.

If you can't afford dropping $10k to buy your equity then you can't afford taking a $10k lower base salary -- let alone a $100k lower base.

An 83(b) election must be filed with the IRS within 30 days after the grant or purchase date of the restricted stock.

Note the restricted stock portion, you may not have received restricted stock as an early employee

[ie, up front]

Are you getting stock or options? Because the 83b election applies to grants of stock, not options.

If options, then I've only ever heard of doing an 83b election in concert with early exercise, so that you are effectively making the election on a stock grant.

I'm not sure whether you can choose to do within 30 days of every tranch of vesting. I've never heard of this, but I'd be interested to know whether this is actually possible.

[1] https://blog.wealthfront.com/always-file-your-83b/

> the 83b election applies to grants of stock, not options

Unless you exercise early, in which case it does.

Disclaimer: I am neither a lawyer nor a CPA. This is not tax advice.

At which point the election is on the stock that you exercise, not the options.

Yeah, that's mentioned in my post.

83b is on grant, not vest. It can be used for options, but may not be a very good idea if the strike is appreciably greater than 0.

You early exercise, which means you pay for options that are not yet vested. If you quit you get refunded what you paid on un-vested shares.

I've mentioned this on every post.

> If options, then I've only ever heard of doing an 83b election in concert with early exercise

And

> The timing doesn't work if your grant vests over a period years, hence the need to early exercise.

Am I being unclear or are people just not reading what I'm writing? Also not sure where these downvotes are coming from. Definitely open to correction, but I've yet to see how it's possible to elect 83b on an option plan with vesting, if you can't / don't opt for early exercise.

Yes, of course you have to early exercise. As you've pointed out. I don't know about downvotes, wasn't one of them.

If I'm correctly understanding the question, you should get the 83b form asap, as there's no downside to having the choice to exercise your options. As mentioned elsewhere once you exercise you have 30 days to file the 83b with the IRS.

You can (and should) think carefully on whether or not to actually early-exercise your shares, based upon the cost and prospects of the business.

EDIT: See the other thread -- in practice, with typical vesting agreements, I think you have to early exercise, thus forfeiting your optionality. Hopefully someone will weigh in with definitive advice.

You still have some optionality as long as you're still within the vesting period. You can quit, forfeiting the unvested portion of your grant. IIRC you even get refunded a prorated portion of the purchase cost, too.

You may also have or be able to negotiate getting an explicit put option at the same price, too. That is, if you can buy shares at 20 cents a pop, you can also sell back to the company any shares you bought at 20 cents also at 20 cents. (NB: put-call parity proves that the value of "call + cash required to exercise" exactly the same as "underlying security + put at same strike", so you have exactly the same amount of value. Well, so long as the assets don't yield dividends, at which point American options that allow early exercise have the same value as European options that don't, and start-ups generally don't pay dividends.)

Where do you suppose the money to refund the unvested early exercise, or to satisfy the put option, will come from if the firm goes belly-up? Wouldn't the granting of the put option confer some quantifiable (taxable) financial benefit as well?