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(h) Deduction by Employer.--In the case of a
transfer of property to which this section applies
* * * there shall be allowed as a deduction under
section 162, to the person for whom were performed the
services in connection with which such property was
transferred, an amount equal to the amount included
under subsection (a), (b), or (d)(2) in the gross
income of the person who performed such services. Such
deduction shall be allowed for the taxable year of such
person in which or with which ends the taxable year in
which such amount is included in the gross income of
the person who performed such services. [Emphasis
added.]
The majority interprets the term "included" as used in
section 83 as if it means actually reported on each service
provider's income tax return or otherwise used to compute the
service provider's income tax liability.3 The majority simply
describes this as the clear, plain, and unambiguous meaning of
the statute. No precedent is cited.
The word "included" is used three times in subsections (a)
and (h) of section 83. Section 83(a) provides that the value of
the property received as compensation for services "shall be
included in the gross income" of the recipient. This means that
such property is required to be included in gross income as a
matter of law.4
3The alternative to reporting as gross income on the
employee's or independent contractor's return would be an
adjustment to gross income in a deficiency determination.
4In Adair v. Commissioner, T.C. Memo. 1985-392, we stated:
(continued...)
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