Discussion:83(b) election and statute of limitations
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Discussion Forum Index --> Advanced Tax Questions --> 83(b) election and statute of limitations
Discussion Forum Index --> Tax Questions --> 83(b) election and statute of limitations
| 25 September 2009 | |
| Client received stock in a private company in return for the sale of 100% of the stock of his own company. The buyer gave him an additional smaller amount of stock related to an 18 month employment agreement. He was advised to consider an 83(b) election with regard to the buyer's stock that he is receiving related to the employment agreement. The reasoning behind the suggestion to make the election was that it will accelerate the statute of limitations on the valuation of the stock received.
Wouldn't a new statute of limitations start running every time that he files a return using the same valuation to support a position? He is going to be reporting capital gains on his 2009 tax return for the sale of his stock, so I would think the IRS can challenge the capital gains position for 3 years from the date that return is filed irrespective of whether he filed an 83(b) earlier on the stock received as compensation. And, he is also hoping to receive additional stock in 2011 under an earn-out provision, so the statute of limitations on that capital gain, I would think, won't even start until he files his 2011 tax return. Apart from that, I have heard that there are pros and cons to the 83(b) election and it seems to me that starting the statute of limitations running should not be the main consideration, such as the risk that the stock goes down in value or is even forfeited. I don't believe that he can file an amendment to get a refund of the taxes paid under the 83(b) election. Anybody want to comment? | |
| 25 September 2009 | |
| try this
TexCPA 11:19, 25 September 2009 (CDT) | |
| 25 September 2009 | |
| The statute of limitations on the 83(b) income recogntion will not start over each time he sells stock. | |
