- 12 -
Second, section 83 does not apply to "the transfer of an
option without a readily ascertainable fair market value". Sec.
83(e)(3). Section 1.83-7(b), Income Tax Regs., provides that
where an option is not actively traded on an established market,
the option does not have a readily ascertainable fair market
value unless the taxpayer can demonstrate all of the following:
(i) The option is transferable by the optionee;
(ii) The option is exercisable immediately in full by the
optionee;
(iii) The option or the property subject to the option is
not subject to any restriction or condition * * * which has
a significant effect upon the fair market value of the
option; and
(iv) The fair market value of the option privilege is
readily ascertainable in accordance with paragraph (b)(3) of
this section.
The option in this case fails the first two conditions. The
Option Agreement states that "The Options are not transferable
and are exercisable only by the Optionee, during his lifetime."
The option was also not exercisable immediately in full by
Goldman. The Option Agreement provides that the Optionees can
exercise the options for 60 days, but only "after the date on
which Company has become a New York Tax Stamp Agent". In view of
petitioner's obvious failure to satisfy the first two conditions,
we need not even consider whether the third or fourth conditions
have been met.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011