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clear that the stock, and not simply money, was what he desired
and pursued. The cases petitioner relies on, which involve
amounts received upon cancellation of employment contracts, do
not apply to the current situation.
Petitioner also contends that the outcome is controlled by
section 83. Section 83(a) provides:
(a) General Rule.--If, in connection with the
performance of services, property is transferred to any
person other than the person for whom such services are
performed, the excess of--
(1) the fair market value of such property * * *
at the first time the rights of the person having the
beneficial interest in such property are transferable
or are not subject to a substantial risk of forfeiture,
whichever occurs earlier, over
(2) the amount (if any) paid for such property,
shall be included in the gross income of the person who
performed such services * * *
Section 83(h) gives a corresponding deduction under section
162(a) "to the person for whom were performed the services in
connection with which such property was transferred".
Section 83 is not applicable here. First, section 1.83-
6(a)(4), Income Tax Regs., provides that the deduction under
section 83(h) does not apply to capital expenditures. We held
above that the origin of the claim for which the settlement
amount was paid was capital in nature. Thus, section 83(h) is
inapplicable.
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