Q: I am a founder of a company that is being acquired. My shares were fully vested in my company, but in the acquisition transaction I am receiving shares of the acquiring company that will be subject to certain vesting conditions. Do I need to file an 83(b) election?

A: Yes, you should file a Section 83(b) election. If you don’t, you could have income when your new shares vest–an outcome you would prefer to avoid.

For further guidance on this issue (and related issues), Revenue Ruling 2007-43 (embedded below) is helpful.

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