Nathan P. and Geraldine V. Morton - Page 21

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             property over the amount, if any, that the taxpayer paid                 
             for such property is included in the taxpayer's gross                    
                  Section 83(b) allows a taxpayer to elect to include                 
             in gross income in the year of receipt the value of the                  
             property transferred in exchange for services regardless                 
             of whether his or her rights in the property are trans-                  
             ferable or subject to a substantial risk of forfeiture.                  
             Section 83(b) provides as follows:                                       

                  (b) ELECTION TO INCLUDE IN GROSS INCOME IN YEAR                     
                  OF  TRANSFER.--                                                     
                       (1) In General.--Any person who performs                       
                  services in connection with which property is                       
                  transferred to any person may elect to include                      
                  in his gross income, for the taxable year in                        
                  which such property is transferred, the excess                      
                            (A) the fair market value of                              
                       such property at the time of transfer                          
                       (determined without regard to any                              
                       restriction other than a restriction                           
                       which by its terms will never lapse),                          
                            (B) the amount (if any) paid for such                     
                  If such election is made, subsection (a) shall                      
                  not apply with respect to the transfer of such                      
                  property, and if such property is subsequently                      
                  forfeited, no deduction shall be allowed in                         
                  respect of such forfeiture.                                         

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Last modified: May 25, 2011