What will be run through payroll for a stock grant?
September 23, 2011
Subject: Re Stock Grant – 83b tax effects as “comp”?
Date: Thu, 03 Dec 2009
I received a stock grant with a “clawback” vesting structure. If I make a Section 83(b) election, what will be run through payroll?
Date: 7 Dec 2009
A Section 83(b) election is your election to disregard the “clawback” vesting, and treat the stock “as if” is was fully vested when received. Therefore, the entire grant would be currently taxable based on the fair market value on the grant date and subject to the related payroll taxes as of the grant date.
The election has to be made within 30 days of the grant date.
If you can’t afford to pay the taxes and making the election would put you in financial distress, you probably shouldn’t make the election.