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section 1.61-2(d), Income Tax Regs., relating to compensation
paid other than in cash, apply to transfers of property "to the
extent such rules are not inconsistent with section 83"). We
also understand that petitioner may deduct the value of the
transferred property when the corresponding value is "included in
the gross income of the [persons] who performed such services."
Because none of petitioner's employees included the corresponding
amount in his or her 1988 income, it follows that petitioner may
not deduct any of the claimed amount in that year. Whereas
petitioner would have us read section 83(h) to allow it a
deduction in 1988 for the amount of income that was includable in
its employees' income for 1988, we decline to do so. An amount
is deductible under section 83(h) in the year that the
corresponding income is "included" in the recipient employee's
income, which means to us that the amount is taken into account
in determining the tax liability of the employee for that year.
See S. Rept. 91-552, supra at 262, 1969-3 C.B. at 502
("The deduction [under section 83(h)] is to be allowed in the
employer's accounting period which includes the close of the
taxable year in which the employee recognizes the income"); see
also Lenz v. Commissioner, 101 T.C. 260, 265 (1993) ("'Allowable
deduction' generally refers to a deduction which qualifies under
a specific Code provision whereas 'allowed deduction', on the
other hand, refers to a deduction granted by the Internal Revenue
Service which is actually taken on a return and will result in a
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