127 T.C. No. 13
UNITED STATES TAX COURT
ANTHONY J. KADILLAK, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2860-04L. Filed November 7, 2006.
P, as a sales assistant with Ariba Technologies,
Inc. (Ariba), received incentive stock options (ISOs)
subject to an employment termination restriction,
whereby Ariba had the right to repurchase nonvested
stock on the date of termination for its exercise
price. On Apr. 5, 2000, P exercised his ISOs and was
transferred all vested stock. The nonvested stock was
placed in escrow and transferred to P as the shares
vested on a monthly basis over 4 years. P timely filed
a sec. 83(b), I.R.C., election in May 2000 for the
exercised ISOs. P’s employment with Ariba was
terminated on Apr. 4, 2001. Ariba timely exercised its
repurchase rights with respect to nonvested stock.
P filed a Federal income tax return for 2000
reporting the gain resulting from the exercise of the
ISO on the vested and the nonvested stock for
alternative minimum tax (AMT) purposes. P subsequently
submitted amended returns for 2000 and 2001 in which he
claimed he was not subject to AMT for nonvested stock
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