Which benefit is associated with making a Section 83(b) election regarding stock options?

Making a Section 83(b) election allows an employee to recognize income tax on the fair market value of the stock at the time of the grant instead of waiting until the stock vests. This is beneficial because it means that the individual will pay tax on the stock's value immediately, which can be advantageous if the stock appreciates significantly in value after the grant date. By electing to include this income early, the individual can potentially lock in a lower tax rate based on the current value, as opposed to a potentially higher tax rate when the stock vests and its value may have increased.

If the stock appreciates significantly, the employee can benefit from potentially favorable long-term capital gains treatment on any gains realized when they eventually sell the stock, rather than paying ordinary income rates on future increases in value after vesting. This makes the immediate taxation a strategic move for those who anticipate strong growth in the stock's value.