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transfer occurs when a taxpayer acquires a beneficial ownership
interest in property rather than meeting the technical
requirements for a transfer of an instrument under State law.
See id.; Schnurr v. Commissioner, T.C. Memo. 1989-275.
According to the agreement and plan, when petitioner
exercised the ISO granted under option No. 117, he acquired
stockholder rights in all exercised shares including the
nonvested shares held in escrow. Pursuant to the agreement,
petitioner also was entitled to receive all regular dividends on
the nonvested shares held in escrow. Because petitioner acquired
beneficial ownership of the nonvested stock held in escrow upon
the exercise of the ISO granted under option No. 117, the
nonvested shares were transferred to petitioner within the
meaning of section 1.83-3(a)(1), Income Tax Regs.
2. An Event Certain To Occur
Petitioner argues the transfer of the nonvested stock was
ineffective pursuant to section 1.83-3(a)(3) and (5), Income Tax
Regs., because his termination of employment from Ariba was
certain to occur and upon his termination he was required to
surrender the nonvested stock for its option price instead of
FMV.
Section 1.83-3(a)(3) and (5), Income Tax Regs., states:
(3) Requirement that property be returned. Similarly,
no transfer may have occurred where property is
transferred under conditions that require its return
upon the happening of an event that is certain to
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