Restricted Stock Awards (RSAs) and 83(b) Election

August 24, 2025

Receiving equity—like restricted stock awards (RSAs)—as payment for services isn’t just a perk. It’s a complex financial event governed by U.S. tax law, especially Section 83 of the Internal Revenue Code. For employees and consultants, understanding how these awards work is critical for smart tax planning and long-term wealth building.

When RSAs are granted with a multi-year vesting schedule, the recipient has a key decision to make: whether to file a Section 83(b) election. This election lets you pay taxes on the value of the stock at the time it’s granted, rather than when it vests. If the company’s stock is expected to grow significantly, this can lock in a lower tax bill and shift future gains into more favorable capital gains treatment.

Offering RSAs often signals that the company expects strong growth and wants to give recipients a chance to benefit from that upside—while also allowing for strategic tax planning. To make the most of this opportunity, it’s essential to understand:

• The legal rules that govern equity compensation

• How vesting schedules affect tax timing

• What kind of equity is being granted—and what strategies that opens up

Disclaimer: The content of the memorandum is provided for general informational purposes only and is not intended to constitute legal, tax, accounting or other professional advice. You should not act or rely on any information herein without seeking the guidance of a qualified professional who is fully aware of your individual circumstances. Confida Tax LLC does not assume any responsibility for errors or omissions or for outcomes related to the use of this information.