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Ariba transferred to petitioner share certificates for the 17,333
shares that had vested by April 5, 2000, and deposited the
remaining 14,667 nonvested share certificates into an escrow
account. As the nonvested shares vested they were transferred to
petitioner.
According to the agreement and plan, when petitioner
exercised the ISOs granted under option No. 117, he acquired
stockholder rights in all shares subject to the ISOs including
the nonvested shares held in escrow. Pursuant to the agreement,
petitioner had the right to receive all “regular cash dividends”
on the nonvested shares held in escrow.
2. Section 83(b) Election
Petitioner timely filed a section 83(b) election in May 2000
for the 32,000 exercised shares granted under option No. 117.3
The section 83(b) election stated: (1) Petitioner’s name,
address, and Social Security number; (2) a description of the
stock with respect to which the election was made; (3) the date
the stock was transferred to petitioner and the taxable year in
which the election was made; (4) the nature of the restriction to
which the property was subject; (5) the FMV at the time the stock
was transferred with respect to which the election was being
3 A sec. 83(b) election must be filed no later than 30 days
after the date the property was transferred. Sec. 1.83-2(b),
Income Tax Regs.
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Last modified: May 25, 2011