[gamblor956]

The IRS generally treats an 83(b) filed by either spouse as jointly filed by the union if they file a joint tax return. Whether they are in a community property state or not is irrelevant from the perspective of federal taxes because the marital joint return already deals with this situation: essentially, the union is treated as a single taxpayer.

(And yes, for those of you who are wondering: a federal tax statement/election signed by one spouse that files a joint return can bind both spouses for federal tax purposes...)

As written, neither 83(b) nor its regulations (specifically 1.83-2, which outlines the requirement for the election) require spousal consent to an 83(b) election, because they are not the person earning the income. The regulations specifically state that the statement is filed by the "person who performed the services." They then pay taxes pursuant to the 83(b) election with the joint tax return, meaning that both spouses have paid their federal tax liability with respect to any future sale.

If this were not the case, the spouses of hundreds of thousands of CA tech workers would owe tens of billions of dollars in back taxes. It would be front page news. But it's not, because it's not actually how federal taxation works...

Note that things get a bit more complicated if the spouses get divorced by the time of the sale of the stock subject to the 83(b) election. Because both spouses (are deemed to have) paid taxes on the 83(b) stock due to the 83(b) election, absent a prenup or postnup generally the 83(b) stock is treated as marital property and the proceeds are similarly marital property to be divided in a divorce. In a community property state, the split is 50/50 (I assume the same is true in non-CP states but as I've never dealt with this outside of CA I can't say). However, note that it's still irrelevant as to whether the other spouse signed the 83(b) election, so long as the election was made while they spouses still filed a joint return.

TLDR: for federal tax purposes, not having a spouse sign your 83(b) election is a non-issue, whether or not you live in a community property state.

[orionsbelt]

This person is a tax lawyer and this should be the top comment.

It also matches what I have heard from a well-regarded tax lawyer that advises startups, who advises getting a spousal signature, but from a “why not just get it”, conservative, belts and suspenders approach, but does not view it as needed.

I’d also point out that even when employees receive a form with a spousal signature space included, many fail to get it signed. If this were an issue, it would have widespread consequences well beyond Carta.

[PopAlongKid]

>Note that things get a bit more complicated if the spouses get divorced by the time of the sale of the stock subject to the 83(b) election. Because both spouses (are deemed to have) paid taxes on the 83(b) stock due to the 83(b) election, absent a prenup or postnup generally the 83(b) stock is treated as marital property and the proceeds are similarly marital property

Paying or not paying tax has no bearing on what is considered community property. It's also not clear what is "more complicated" about splitting marital property subject to an 83(b) election compared to other marital property.

[gamblor956]

Paying or not paying tax has no bearing on what is considered community property

Yes, it does. In the event of divorce, in the absence of a prenup or postnup explicitly stating that the [83(b) stock or other income] is one spouse's separate income, the payment of taxes on a joint return is the single most important evidence of whether income is considered marital income or separate income, the legal reasoning being that a spouse would not have paid taxes on the other spouse's separate income.

It's also not clear what is "more complicated" about splitting marital property subject to an 83(b) election compared to other marital property.

The "more complicated" is in comparison to how 83(b) elections are treated if the spouses remain together. It's not a comparison to other marital property, though in general stock in a company that is not yet publicly traded can be extremely complicated to divvy up in a divorce.

[PopAlongKid]

> the payment of taxes on a joint return is the single most important evidence of whether income is considered marital income or separate income,

I would expect that in the absence of prenup/postnup, the laws of the community property jurisdiction would take effect, making all earned income community income. Which law or regulation, for example in California, states that federal tax must be paid on income via a joint tax return for it to be treated as community income?

What if in the same year as the 83(b) election, the MFJ return shows no tax liability, due to credits, little other income, large deductions, etc. Does that suddenly make community property law moot?