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stock options. Systems withheld Social Security and Medicare
taxes (FICA taxes) totaling $356 from the $4,650 payment.
Petitioner and Mrs. Buckley jointly filed a 1999 Federal
income tax return. On the return, petitioner and Mrs. Buckley
reported wages of $49,287 and a capital gain of $4,650. The
$4,650 capital gain was reported on Schedule D, Capital Gains and
Losses, as the sale of 300 shares of Systems. The $356 of FICA
taxes withheld from the $4,650 was claimed as a payment on Line
62, “Excess social security and RRTA tax withheld”.
Respondent determined that the $4,650 received by Mrs.
Buckley on the cancellation of the Systems stock options was
taxable as ordinary income. Respondent also disallowed the
claimed excess FICA taxes withheld of $356.
In general, the Commissioner’s determinations are presumed
correct, and the taxpayer bears the burden of proving otherwise.
Rule 142(a); Welch v. Helvering, 290 U.S. 111 (1933). Petitioner
does not argue the applicability of section 7491(a), and the
record reflects that section 7491(a) does not apply.
Section 83(a) generally provides that when property is
transferred to a taxpayer in connection with the performance of
services, the excess fair market value of the property over the
amount, if any, paid for the property, is includable as
compensation in the gross income of the taxpayer who performed
the services. See also sec. 1.83-1(a)(1), Income Tax Regs.
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Last modified: May 25, 2011