Employee compensation provisions

Section 83(i) Election

Stock plan participants of privately held companies (excluding the CEO, CFO, one-percent owners, and top four highest compensated individuals) can elect to defer tax on certain equity grants

The TCJA established a new election for certain stock plan participants to defer tax on certain equity grants to the earlier of:

  • Five years after equity became “substantially vested”
  • Date the stock becomes transferable
  • Date the employee becomes excluded
  • Date the stock becomes publicly traded
  • Date the employee revokes 83(i) election
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    The election is available only if the employer is a non–publicly traded company. In addition, the CEO, CFO, one-percent owners, and top four highest compensated individuals are also excluded from making the election.