AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
For a US tax resident, shares in a Nigerian startup received for freelance work are taxable income at fair market value, either when they vest or, if you file a section 83(b) election no later than 30 days after transfer, at the time they are transferred. Foreign shares held directly count toward Form 8938 thresholds but not FBAR, and holding 10% or more can bring Form 5471. Get the grant documented before you start work.
What you are actually being offered
Startups use loose language. "We will give you 1%" can mean shares issued now, shares issued later, options, or a promise with no paper behind it. Each has a different tax result. Before agreeing, get answers to five questions in writing:
- Which company issues the equity: the Nigerian company or a foreign holding company?
- Is it shares now, or options to buy shares later?
- How many, of what class, and out of how many in total?
- What is the vesting schedule, and what happens to unvested equity if the work ends?
- What value does the company put on the shares today, and how was it worked out?
Shares received for work: the US tax rule
Shares given as pay are taxable compensation, just like cash. Where the shares can be taken back if you stop working, the general rule under section 83 is that you are taxed when they vest, on their value at that date less anything you paid. IRS Form 15620 (Rev. April 2025) describes the alternative: a section 83(b) election, which lets you include the value at transfer instead of at vesting.
How the 83(b) election works
- Deadline: no later than 30 days after the date the property was transferred. If the 30th day is a weekend or holiday, a postmark on the next business day counts.
- Where: mailed to the IRS office where you file your return.
- Copy: given to the company you did the work for.
- Contents: description and number of shares, the restrictions, fair market value, the amount you paid, and the amount you include in income.
The election is a bet. If the shares are cheap at transfer and grow, you pay little tax now and none at vesting, and later growth is generally a capital gain when you sell. If the startup fails, you paid tax on value you never received. There is no second chance after 30 days, so diarise the date the moment shares are issued.
If the shares vest immediately
Fully vested shares on day one are not subject to forfeiture, so no election is needed: their value is income straight away. Report it at a defensible value, which is where the company's own valuation, or a recent funding round price, matters.
Options are different
Options give a right to buy shares later at an exercise price. Their tax depends on the plan and on whether the option has a readily ascertainable value, and the US deferred compensation rules in section 409A treat an option as outside their scope only if, among other conditions, the exercise price is never less than fair market value at grant. A Nigerian startup's option plan may not have been written with US rules in mind. Have a US tax professional read the plan before you accept options as pay.
Reporting foreign shares
| Form | When it can apply |
|---|---|
| Form 8938 | Foreign stock not held in a financial account is reportable, per the IRS comparison table, once your foreign assets pass the Form 8938 threshold for your filing status |
| FBAR (FinCEN 114) | Shares held directly are not reported; foreign bank and brokerage accounts are |
| Form 5471 | Can apply when a US person acquires 10% or more of a foreign corporation, or is an officer or director when a US person does |
| Schedule C | The value of equity received for work is part of your self-employment income |
Form 5471 penalties start at $10,000 per company per year, according to the IRS instructions, so check this if your stake is significant. Our guide to Form 5471 for Nigerian companies explains the categories.
Documents to collect
- A signed agreement setting out the equity, the vesting and the services.
- The board or shareholder resolution approving the issue.
- A share certificate or entry in the register of members, and evidence the allotment was filed with the registry where the company is incorporated.
- The valuation the company used, with its date.
- Your 83(b) election and proof of mailing, if you make one.
Worked example (illustrative)
Ngozi, a product designer in Atlanta, accepts 10,000 restricted shares instead of a $6,000 fee. The startup values its shares at $0.10, so the grant is worth $1,000. She files an 83(b) election within 30 days and reports $1,000 of income. Two years later the shares vest and are worth $2 each, $20,000 in total; with the election she reports nothing at vesting. Without it she would have reported $20,000 of ordinary income at vesting. If the startup fails instead, she has paid tax on $1,000 she never received. These figures are examples only.
Where Pryme fits
Equity does not pay rent. If you mix equity with a cash fee, a Pryme account opened from the US can receive the cash part from Nigeria in naira or dollars, with Swap to convert when you choose. See developers working for Nigerian startups for pricing the mix, and multicurrency accounts for how balances are held.
Questions people ask
Is equity from a Nigerian startup taxable in the US?
Yes for a US tax resident. Shares received for work are income at fair market value when they vest, or at transfer with a section 83(b) election.
What is the deadline for an 83(b) election?
No later than 30 days after the shares are transferred, per IRS Form 15620.
Do I report Nigerian startup shares on my FBAR?
Not shares held directly. The IRS comparison table says foreign stock not held in a financial account goes on Form 8938, not FBAR.
When does Form 5471 apply to startup shares?
It can apply when a US person acquires 10% or more of a foreign corporation, among other categories. Check the Form 5471 instructions.
Sources
- IRS: Form 15620, Section 83(b) Election (Rev. 4-2025) · accessed Oct 2026
- eCFR: 26 CFR 1.409A-1, definitions and covered plans · accessed Oct 2026
- IRS: Comparison of Form 8938 and FBAR requirements (reviewed 19 Sep 2026) · accessed Oct 2026
- IRS: Instructions for Form 5471 · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.