CALDERWOOD & HARKNESS LLP One Liberty Plaza, 45th Floor New York, NY 10006
Telephone: (212) 555-7000 Facsimile: (212) 555-7001 www.calderwoodharkness.com
[Insert Date of Mailing]
Template prepared: May 31, 2024
Matter No. [Insert Matter Number] / Engagement No. [Insert Engagement Number]
VIA UNITED STATES CERTIFIED MAIL RETURN RECEIPT REQUESTED
Internal Revenue Service [Insert applicable IRS Service Center address based on taxpayer's state of residence]
Instruction to user: Determine the correct IRS Service Center address by reference to the instructions for Form 1040 for the taxpayer's state of residence. The correct address is the Service Center where the taxpayer would file their individual federal income tax return. Do not use the address for payment of taxes owed, as this may differ from the address for returns and election filings.
Re: Election Under Section 83(b) of the Internal Revenue Code of 1986, as Amended
Taxpayer Name: [Insert Full Legal Name of Electing Taxpayer]
Social Security Number: [Insert SSN]
Dear Sir or Madam:
This letter accompanies and transmits an election under Section 83(b) of the Internal Revenue Code of 1986, as amended (the "Code"), and Treasury Regulations Section 1.83-2(b) (the "Election"), made by the above-referenced taxpayer in connection with the transfer of property described below. The Election relates to property received by the taxpayer that is subject to a substantial risk of forfeiture within the meaning of Section 83(a) of the Code, and the taxpayer hereby elects to include in gross income for the taxable year in which the property was transferred the excess (if any) of the fair market value of the property at the time of transfer (determined without regard to any restriction other than a restriction which by its terms will never lapse) over the amount paid for such property.
The property that is the subject of this Election is described as follows: [Insert description of property, e.g., Class [\_] Units of [Insert Entity Name]] (the "Property"). The Property was transferred to the taxpayer on [Insert Date of Transfer] (the "Transfer Date"). Pursuant to Section 83(b) of the Code and Treasury Regulations Section 1.83-2(b), the Election must be filed with the Internal Revenue Service no later than thirty (30) days after the date on which the Property was transferred to the taxpayer. The filing deadline for this Election is [Insert Filing Deadline — 30 days after transfer date].
Enclosed Election Statement
Enclosed herewith for filing with the Internal Revenue Service is the original signed Section 83(b) Election statement, duly executed by the taxpayer. The Election statement has been prepared in accordance with the requirements of Treasury Regulations Section 1.83-2(e) and sets forth all information required thereunder, including the name, address, and taxpayer identification number of the electing taxpayer; a description of the property with respect to which the Election is being made; the date on which the property was transferred and the taxable year for which the Election is made; the nature of the restrictions to which the property is subject; the fair market value of the property at the time of transfer (determined without regard to any lapse restriction); the amount paid by the taxpayer for the property; and a statement that copies of the Election have been furnished to all persons and entities required to receive copies under applicable Treasury Regulations.
In addition to the original Election statement enclosed herewith for filing, a duplicate copy of the Election statement is also enclosed for the purpose of IRS date-stamping and return, as described further below. Copies of the executed Election are being distributed separately to all required parties as set forth in the distribution instructions contained in this letter.
Filing Method
This transmittal letter and the enclosed Election statement are being sent to the Internal Revenue Service via United States Certified Mail, Return Receipt Requested, in accordance with best practices for documenting timely filing of Section 83(b) elections. The certified mail article number assigned by the United States Postal Service for this mailing is as follows:
USPS Certified Mail Article Number: [Insert USPS Certified Mail Article Number]
Guidance note to user: Retain the original certified mail receipt (USPS Form 3800) and the return receipt (green card, PS Form 3811) as proof of timely filing. These records constitute the taxpayer's primary evidence that the Election was postmarked and filed within the thirty (30) day statutory deadline. These records should be kept with the taxpayer's permanent tax files and should not be discarded. In the event that the Internal Revenue Service questions the timeliness of the Election, the certified mail receipt and return receipt will serve as the taxpayer's documentary proof of filing. Calderwood & Harkness LLP also recommends retaining a photocopy of the certified mail receipt for the firm's matter file.
Request for Acknowledgment
We respectfully request that the Internal Revenue Service date-stamp the enclosed duplicate copy of the Section 83(b) Election statement and return it to the taxpayer in the self-addressed, stamped envelope provided herewith. The date-stamped copy will serve as the taxpayer's confirmation that the Election has been received and filed with the Internal Revenue Service.
Instruction to user: Before mailing, enclose a self-addressed, stamped envelope (addressed to the taxpayer's mailing address or, if preferred, to Calderwood & Harkness LLP for forwarding) together with a duplicate copy of the executed Election statement. The duplicate copy should be clearly marked or otherwise identified as the taxpayer's copy for return by the IRS with a date stamp. Ensure that adequate postage is affixed to the return envelope.
Copy Distribution Requirements
In accordance with Treasury Regulations Section 1.83-2(c) and (d), and as a matter of best practice, the taxpayer is required and advised to distribute copies of the executed Section 83(b) Election statement as follows:
1. To the Internal Revenue Service — The original executed Election statement is enclosed with this transmittal letter and is being filed with the Internal Revenue Service at the Service Center identified above. This filing is being made via United States Certified Mail, Return Receipt Requested, to establish proof of timely filing. This copy constitutes the official filing of the Election for purposes of Section 83(b) of the Code and Treasury Regulations Section 1.83-2(b).
2. To the Transferor Entity — A copy of the executed Election statement must be delivered promptly to the person or entity for whom the services giving rise to the transfer of the Property were performed, or the transferor of the Property if different. The copy should be delivered to: [Insert name and address of the entity that transferred the property, e.g., the LLC or partnership]. Delivery may be made by hand delivery, overnight courier, or electronic transmission (email), provided that the taxpayer retains confirmation of delivery. Treasury Regulations Section 1.83-2(d) requires that a copy of the Election be furnished to the transferor, and failure to provide such copy may jeopardize the validity of the Election.
3. To the Taxpayer's Personal Federal Income Tax Return — A copy of the executed Election statement must be attached to the taxpayer's federal income tax return (Form 1040 or applicable form) for the taxable year in which the transfer of the Property occurred, in accordance with Treasury Regulations Section 1.83-2(c). The taxpayer should retain a copy specifically designated for this purpose and should provide the copy to the taxpayer's personal tax return preparer or advisor with instructions to attach it to the return when filed. If the taxpayer has already filed the return for the relevant taxable year before the Election is made, the taxpayer should file an amended return (Form 1040-X) with the Election statement attached.
4. To the Taxpayer's Personal Records — A copy of the executed Election statement should be retained in the taxpayer's permanent personal files, together with all proof of mailing (including the USPS certified mail receipt, the return receipt green card, and, when received, the IRS date-stamped copy of the Election). These records should be maintained indefinitely, as the Internal Revenue Service may inquire about the Election at any time during the applicable statute of limitations period or thereafter in the event of an audit or examination.
Critical Deadline Warning
IMPORTANT: The Section 83(b) election MUST be filed with the Internal Revenue Service no later than thirty (30) days after the date the property is transferred to the taxpayer. This deadline is established by statute under Section 83(b)(2) of the Internal Revenue Code and by Treasury Regulations Section 1.83-2(b), and it cannot be extended for any reason. Failure to file a timely election will result in the election being invalid, and the taxpayer will be taxed under the general rules of Section 83(a) of the Code as the substantial risk of forfeiture lapses — potentially resulting in significantly greater tax liability.
Transfer Date: [Insert Transfer Date]
30-Day Filing Deadline: [Insert 30-Day Filing Deadline]
There is no relief available for late-filed Section 83(b) elections. The Internal Revenue Service does not have authority to grant extensions of the thirty (30) day filing deadline, and the Tax Court and other federal courts have consistently held that late-filed elections are invalid regardless of the circumstances. See, e.g., Cramer v. Commissioner, T.C. Memo. 2023-42; Rao v. Commissioner, T.C. Memo. 2016-174; Knudsen v. Commissioner, 131 T.C. 185 (2008). Private letter rulings requesting relief from the filing deadline have been denied absent extraordinary circumstances involving reliance on a tax advisor and an inadvertent failure unrelated to the taxpayer's own negligence, and even in such cases, relief is exceedingly rare.
Calderwood & Harkness LLP strongly recommends that the taxpayer file the Election promptly upon execution and well in advance of the thirty (30) day deadline, to allow adequate time for postal delivery and to mitigate any risk of untimely filing. The taxpayer should not wait until the final days before the deadline to mail the Election.
Taxpayer Information Summary
Before mailing, the user should complete the following reference table with all taxpayer-specific information. This table is provided for the convenience of the user in assembling the filing package and should be completed in full prior to mailing. The completed table should be retained in the firm's matter file and in the taxpayer's personal records.
Please do not hesitate to contact the undersigned should you have any questions regarding this filing, the enclosed Election statement, or the requirements for timely filing and distribution of copies of the Election under Section 83(b) of the Code and the applicable Treasury Regulations. We are available to assist with any aspect of the Election process and to confirm that all filing requirements have been satisfied.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
[Insert Name of Signing Attorney] Calderwood & Harkness LLP One Liberty Plaza, 45th Floor New York, NY 10006 Telephone: [Insert]
Email: [Insert]
Enclosures:
1. Original executed Section 83(b) Election Statement
2. Duplicate copy of Section 83(b) Election Statement (for IRS date-stamp and return)
3. Self-addressed, stamped return envelope
cc:
[Insert Name of Electing Taxpayer] (via [email / hand delivery])
[Insert Name and Address of Transferor Entity — for entity copy delivery]
[Insert Name of Taxpayer's Personal Tax Advisor, if applicable]
Calderwood & Harkness LLP file — Matter No. [Insert]
APPENDIX: INSTRUCTIONS FOR USE OF THIS TEMPLATE
Internal Guidance Page — NOT To Be Included in the Mailed Letter
This appendix is provided for internal use only by attorneys and staff of Calderwood & Harkness LLP and by authorized users of this template. This page and any subsequent pages of the appendix must be removed from the transmittal letter before mailing to the Internal Revenue Service. This appendix does not constitute part of the Election or the transmittal letter and should not be included in any filing package.
Purpose. This template transmittal letter is to be used by each rollover participant who receives unvested equity interests in connection with the closing of the transaction to accompany their Section 83(b) election filing with the Internal Revenue Service. The Election is appropriate when the taxpayer receives property in connection with the performance of services and such property is subject to a substantial risk of forfeiture within the meaning of Section 83 of the Code. Common examples of property subject to this type of Election include, but are not limited to, Class B Units, profits interests, or other equity interests in a limited liability company or partnership that are subject to time-based vesting, performance-based vesting, or other conditions constituting a substantial risk of forfeiture.
By making a timely Section 83(b) election, the taxpayer elects to recognize income (if any) at the time of the transfer of the property rather than at the later date on which the substantial risk of forfeiture lapses (i.e., when the property vests). For profits interests and similar equity interests that have a fair market value of zero at the time of grant (when properly structured), the Election results in no immediate income recognition and ensures that future appreciation is treated as capital gain rather than ordinary income upon a subsequent disposition or liquidity event.
Users. This template is prepared for use by each individual making a Section 83(b) election. A separate transmittal letter should be prepared and mailed for each electing taxpayer. If multiple taxpayers are making Elections in connection with the same transaction, each taxpayer's filing must be prepared, executed, and mailed independently. Joint filers (spouses) should each prepare a separate Election and transmittal letter if each spouse has received property subject to a substantial risk of forfeiture.
The attorney responsible for the matter should review each completed transmittal letter and Election statement for accuracy and completeness before the filing package is assembled and mailed. The attorney should also confirm the identity of the correct IRS Service Center for each taxpayer based on the taxpayer's state of residence.
Timing. The Election and this transmittal letter must be postmarked (via United States Certified Mail, Return Receipt Requested) no later than thirty (30) days after the property transfer date. The transfer date is the date on which the property is transferred to the taxpayer in connection with the performance of services, which typically corresponds to the closing date of the transaction or the date on which the equity interests are issued to the taxpayer pursuant to the relevant operating agreement, partnership agreement, subscription agreement, or award agreement.
Guidance on calculation of the 30-day deadline:
• The 30-day period begins on the day after the date of the property transfer. For example, if the property is transferred on June 1, 2024, the 30-day period begins on June 2, 2024, and expires on July 1, 2024. The Election must be postmarked no later than July 1, 2024.
• If the 30th day falls on a Saturday, Sunday, or federal holiday, the deadline is extended to the next business day, in accordance with Section 7503 of the Code and Treasury Regulations Section 301.7503-1.
• Calderwood & Harkness LLP recommends that the Election be mailed no later than five (5) business days before the expiration of the 30-day deadline to allow a margin of safety for postal delays and to ensure that proof of timely filing is clearly established.
Checklist Before Mailing
The following checklist should be completed by the responsible attorney or paralegal before the filing package is released for mailing. Each item must be confirmed before the package is sent.
• [ ] All placeholder fields in the transmittal letter completed with taxpayer-specific information
• [ ] All placeholder fields in the Section 83(b) Election statement completed with taxpayer-specific information
• [ ] Original Section 83(b) Election statement reviewed for accuracy and completeness
• [ ] Original Section 83(b) Election statement signed and dated by the taxpayer (and spouse, if applicable for community property or joint ownership purposes)
• [ ] Original signed Election statement enclosed in the mailing package
• [ ] Duplicate copy of the signed Election statement enclosed with a self-addressed, stamped envelope for IRS date-stamping and return
• [ ] Correct IRS Service Center address confirmed based on the taxpayer's state of residence and the current instructions for Form 1040
• [ ] Mailing envelope addressed to the correct IRS Service Center
• [ ] United States Certified Mail, Return Receipt Requested postage affixed to the mailing envelope
• [ ] Certified mail article number recorded on the transmittal letter and in the matter file
• [ ] Copy of the executed Election statement delivered or sent to the transferor entity, or arrangements made for prompt delivery after mailing
• [ ] Copy of the executed Election statement set aside for attachment to the taxpayer's personal federal income tax return (Form 1040) for the taxable year in which the transfer occurred
• [ ] Copy of the executed Election statement retained in the taxpayer's permanent personal files
• [ ] Copy of the executed Election statement and transmittal letter provided to Calderwood & Harkness LLP for retention in the matter file
• [ ] This appendix (Instructions for Use) removed from the filing package before mailing — this page must NOT be included in the package mailed to the IRS
Post-Mailing Steps. Upon mailing the Election filing package, the following post-mailing steps should be completed:
1. Retain USPS certified mail receipt and return receipt (green card). The certified mail receipt (USPS Form 3800) should be retained immediately upon mailing. The return receipt (PS Form 3811, the green card) will be returned to the sender by the United States Postal Service after the package is delivered to the IRS Service Center. Both documents should be filed with the taxpayer's permanent records and copied for retention in the Calderwood & Harkness LLP matter file.
2. Upon receipt of IRS date-stamped copy, file with taxpayer's permanent records. If the IRS returns the date-stamped duplicate copy of the Election statement, it should be forwarded to the taxpayer for retention in the taxpayer's permanent files. If the date-stamped copy is returned to Calderwood & Harkness LLP, the firm should promptly forward it to the taxpayer and retain a copy in the matter file. Note that the IRS does not always return date-stamped copies; the certified mail receipt and return receipt constitute the primary proof of timely filing regardless of whether the date-stamped copy is returned.
3. Confirm with transferor entity that its copy has been received. The responsible attorney or paralegal should follow up with the transferor entity (or its counsel) to confirm that the entity has received its copy of the executed Election statement. This confirmation should be documented in the matter file.
4. Remind taxpayer to attach a copy of the Election to their Form 1040 for the taxable year of the transfer. The responsible attorney should communicate to the taxpayer (and the taxpayer's personal tax advisor, if applicable) that a copy of the Election statement must be attached to the taxpayer's federal income tax return for the taxable year in which the property transfer occurred. This communication should be made in writing and documented in the matter file.
5. Calendar a follow-up reminder. The responsible attorney should calendar a follow-up reminder for the tax filing season following the year of the property transfer to confirm that the taxpayer (or the taxpayer's personal tax advisor) has attached a copy of the Election to the taxpayer's filed return.
END OF TEMPLATE — APPENDIX PAGE(S) TO BE REMOVED BEFORE MAILING
| Field | Entry |
| Full Legal Name of Taxpayer | [Insert] |
| Social Security Number | [Insert] |
| Taxpayer's Mailing Address | [Insert] |
| Date of Property Transfer | [Insert] |
| 30-Day Filing Deadline | [Insert] |
| Description of Property Received | [Insert, e.g., Class [\_] Units of [Insert Entity Name]] |
| Name and EIN of Transferor Entity | [Insert Entity Name]; EIN: [Insert] |
| IRS Service Center Address | [Insert] |
| Certified Mail Article Number | [Insert] |
| Date of Mailing | [Insert] |