- 2 -
and additions to tax pursuant to sections 6653(a)(1)1 and 6661 in
the amounts of $104,976.70 and $524,883.50, respectively.
The issues remaining for our consideration concern whether
petitioners are liable for additions to tax under section
6653(a)(1) and (2) and section 6661 for the taxable year 1982.
The parties have stipulated that the conclusions in Cramer v.
Commissioner, 101 T.C. 225 (1993), affd. 64 F.3d 1406 (9th Cir.
1995), control as to the underlying income tax deficiency.
In Cramer v. Commissioner, supra, the taxpayers, like
petitioner Albert J. Henry, were shareholders and officers in a
corporation that issued certain stock options subject to
restrictions on vesting and transfer in connection with their
performance of services for the corporation. For certain of the
options, the taxpayers filed "section 83(b) elections" in which
they reported the fair market value of the options as zero. Upon
the sale of the options to an unrelated company in 1982, the
taxpayers misstated the transactions on their returns, reporting
them as gains from the sale of capital assets. We sustained
respondent's determination that the proceeds from such options
were taxable as ordinary income at the time of disposition
because the options did not have "readily ascertainable fair
market values" as defined in section 1.83-7, Income Tax Regs.
1 All section references are to the Internal Revenue Code in
effect for the year at issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
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