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Federal Tax Day – Capital Gains and Loss

Tax News, Journals and Newsletters > Federal Tax > Federal Tax Day – Current > INTERNAL REVENUE SERVICE > I.1, Regulations Eliminate Requirement to Submit Copy of 83(b) Election with Individual Tax Returns (T.D. 9779), (Jul. 26, 2016). Capital Gains and Loss.

The IRS has issued final regulations that eliminate the requirement that a copy of a Code Sec. 83(b) election be submitted with an individual’s tax return. These regulations are applicable for property transferred on or after January 1, 2016.

Generally, when an individual is compensated for the performance of services with property (such as stock), the difference between the fair market value and the amount (if any) paid for the property is includable in the taxpayer’s income in the tax year that the individual’s rights in the property is transferable or not subject to a substantial risk of forfeiture. However, individuals may elect to include the fair market value at the time of transfer, by filing a Code Sec. 83(b) election with the IRS no later than 30 days after the date on which the property is transferred to the individual. Under the previous scheme, a copy of this statement was required to be filed with the individual’s income tax return.

The IRS has recognized that affected taxpayers who wish to electronically file (e-file) their annual income tax returns are unable to do so because commercial filing software does not consistently provide a method to attach the copy of the election to their e-filed return. As a result, these taxpayers are unable to take advantage of the more efficient e-file program.

In order to remove this obstacle for individuals wishing to e-file their income tax returns, the regulations eliminate the requirement that a copy of the election be submitted with the individual’s tax return. The election must still be filed with the IRS no later than 30 days after the date that the property is transferred to the individual.

T.D. 9779, 2016FED ¶47,039

Other References:

Code Sec. 83

CCH Reference – 2016FED ¶6382

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