- 14 -
12, and its effect that an employer's deduction is in fact offset
by a corresponding inclusion in income comports with the
statute's purpose of matching an employer's deduction with income
inclusion by the employee.
The history of these regulations is noteworthy. When the
Commissioner originally proposed these regulations in 1971, they
did not contain a safe harbor provision under which an employer
could deduct the value of property transferred to an employee as
compensation for services, absent the employee's including the
corresponding amount in income. Section 1.83-6, Income Tax
Regs., was originally proposed as follows:
�1.83-6. Deduction by employer.--(a) In general.
In the case of a transfer of property in connection
with the performance of services * * *, there is
allowed as a deduction under section 162 or 212, to the
person for whom such services were performed, an amount
equal to the amount included, under subsection (a) * *
* of section 83 as compensation, in the gross income of
the person who performed such services, but only to the
extent such amount meets the requirements of section
162 or 212 and the regulations thereunder. Such
deduction shall be allowed only for the taxable year of
such person in which or with which ends the taxable
year for which such amount is included as compensation
in the gross income of the person who performed such
services. * * * [Sec. 1.83-6, Proposed Income Tax
Regs., 36 Fed. Reg. 10793 (June 3, 1971).]
After these proposed regulations were published, the Commissioner
received numerous comments expressing concern as to the
difficulty that an employer may have in demonstrating that an
amount has actually been included in an employee's gross income.
Accordingly, the Commissioner, in finalizing the proposed
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011