Restricted stock, as relevant to 83(a) and 83(b) of the Internal Revenue Code, is a form of property granted in exchange for services. It is not taxable immedia

Restricted stock, as relevant to 83(a) and 83(b) of the Internal Revenue Code, is a form of property granted in exchange for services. It is not taxable immediately under 83(a) upon its receipt by the service provider while it remains subject to a substantial risk of forfeiture. Once that risk lapses, it is subject to tax. Thus, anyone whose grant vests over, say, 48 months at 1/48th per month would be potentially subject to up to 48 taxable events, one for each increment of stock that vests over the 4 years. Of course, people don't want to be subject to this, and that is why they file 83(b) elections. With an 83(b) election, the restricted stock recipient elects to be taxed at once on the full value of the grant on the day it was made, notwithstanding that it remains subject to a substantial risk of forfeiture. Thus, when you get your million share grant at $.001 per share, you elect to pay tax on the difference between the $1K you paid for it and the $1K that it is worth on the date of grant. Hence, you pay tax on $-0-. In this context, the "substantial risk of forfeiture" analysis is not relevant. The idea of "risk of forfeiture" applies only when someone already owns stock and can lose it. Here, the Winklevoss brothers never owned the FB stock (nor were they receiving it in exchange for any services they were performing and so neither 83(a) nor 83(b) applies).