Section 83 of the Internal Revenue Code is important to anyone who deals with stock options or other forms of equity compensation: it tells us when the recipient must report income and how to measure its value. The IRS has proposed changes to the regulations that would take effect January 1, 2013. In essence, though, the proposal merely reflects positions the IRS previously staked out in Rev. Rul. 2005-48, so the regulation would confirm the existing view of the IRS rather than make a genuine change in the law.
Minor update: Our book Consider Your Options discusses the effect of various restrictions, and states that a lockup period does not prevent shares from being treated as vested “although there is no direct authority on the issue.” The proposed regulations address this point. The conclusion in our book is accurate, but it is no longer correct to say there is no direct authority.