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transfer, i.e., March 13, 1992. Petitioner claims the deduction
at issue based on section 83(h)4 and section 1.83-6(a)(3), Income
Tax Regs.5 Section 83(h) allows a deduction in the year the
amount of a transfer is included in the employees' income.
Section 1.83-6(a)(3)(first sentence), Income Tax Regs., allows an
accrual basis employer an earlier deduction, "in accordance with
his method of accounting", where there has been a transfer of
"substantially vested" assets to the employee.
4 Sec. 83(h) provides:
(h) Deduction by Employer.--In the case of a
transfer of property to which this section applies or a
cancellation of a restriction described in subsection
(d), there shall be allowed as a deduction under
section 162, to the person for whom were performed the
services in connection with which such property was
transferred, an amount equal to the amount included
under subsection (a), (b), or (d)(2) in the gross
income of the person who performed such services. Such
deduction shall be allowed for the taxable year of such
person in which or with which ends the taxable year in
which such amount is included in the gross income of
the person who performed such services.
5 Sec. 1.83-6(a), Income Tax Regs. provides in pertinent part:
(3) Exceptions. Where property is substantially
vested upon transfer, the deduction shall be allowed to
such person in accordance with his method of accounting
(in conformity with sections 446 and 461). In the case
of a transfer to an employee benefit plan described in
� 1.162-10(a) or * * * [other transfers not applicable
in this case], section 83(h) and this section do not
apply.
However, should another section require that petitioner not use
its usual method of accounting, sec. 1.461-1(a)(2)(iii)(A),
Income Tax Regs., provides that the sec. 461 rules will defer to
that other provision.
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