I've recently changed jobs and have joined a small startup company. Besides salary, I've also been given some stock options, and am coming up against the deadline to file an 83b election. I'm currently trying to decide whether or not to do so. The shares have a valuation so that it would involve some cash to purchase them at this time. Is there a downside to filing the 83b besides the possible loss of the cash to exercise at this time? How does the IRS know the fair market value of stock for privately held companies?