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Fenwick & West was founded in 1972 in the heart of Silicon Valley—before “Silicon Valley” existed—by four visionary lawyers who left a top-tier New York law firm to pursue their shared belief that technology would revolutionize the business world and to pioneer the legal work for those technological innovations. In order to be most effective, they decided they needed to move to a location close to primary research and technology development. These four attorneys opened their first office in downtown Palo Alto, and Fenwick became one of the first technology law firms in the world.  MORE >

From our founding in 1972, Fenwick has been committed to promoting diversity and inclusion both within our firm and throughout the legal profession. For almost four decades, the firm has actively promoted an open and inclusive work environment and committed significant resources towards improving our diversity efforts at every level.  MORE >

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Year after year, Fenwick & West is honored for excellence in the legal profession. Many of our attorneys are recognized as leaders in their respective fields, and our Corporate, Tax, Litigation and Intellectual Property Practice Groups consistently receive top national and international rankings, including:

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At Fenwick, we have a passion for excellence and innovation that mirrors our client base. Our firm is making revolutionary changes to the practice of law through substantial investments in proprietary technology tools and processes—allowing us to deliver best-in-class legal services more effectively.   MORE >

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Section 83(b) Election - Better Safe Than Sorry

Founders, executives and other employees of fast growing companies – if you received or are about to receive restricted stock in connection with the performances of services, you should consider making a timely § 83(b) election in the US, even if you are not currently taxed in the US.

Generally, if stock is transferred in connection with the performances of services, the person performing such services may elect, for US federal income tax purposes, to include in gross income the fair market value of the property (less the amount paid for the stock, if any) at the time of transfer as compensation for services. If this election is made, the rules in the US that generally would require recognition of income when vesting occurs, would not apply. As a result, subsequent appreciation in the value of the stock between the time of its grant and the time when it vests is not taxable as compensation to the person who performed the services.

This treatment could turn out to be extremely beneficial to many non-US founders, executives and other employees of fast growing companies that,in connection with the performance of services, received amounts of stock that have little or no value when granted (but may significantly appreciate in value), and that at a later point in time are taxed in the US (e.g., because they move to the US). However,failure to make a valid § 83(b) election could result in a significant tax hit to such persons after they become subject to US tax and their stock vests.

A valid § 83(b) election must be made not later than 30 days after the date of the transfer of the stock, and is to be made in a manner set forth in the regulations. There are no exceptions to this timely filing rule. Therefore, as further discussed below,careful consideration should be given to situations where non-US persons received restricted stock in connection with the performances of services, but failed to timely make a § 83(b) election, and become,or are about to become, US persons.

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Originally published in the Global Tax Weekly on May 22, 2014.