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of the person who provided the services, at the time
the compensation becomes includible in the gross income
of the person who performed the services. This timing
rule is a change from the regulations as proposed in
1971, which allowed a deduction at the time an amount
was actually included in gross income. This change was
suggested by public comments to the regulations as
proposed in 1971. [T.D. 7554, 1978-2 C.B. at 72-73;
emphasis added.]
There is nothing in T.D. 7554, supra, to indicate that these
regulatory provisions allowing the deduction "at the time the
compensation becomes includible" were intended to be anything
other than a proper interpretation of the statutory language of
section 83(h). Nothing in T.D. 7554, supra, describes the use of
the word "includible" as a "safe harbor" or an "employer
friendly" variance from the statutory requirement. Indeed, T.D.
7554, supra, states that the U.S. Treasury Department rejected
any suggested regulatory language that conflicted with the
express statutory language.
Many comments suggested changes that either conflicted
with the express statutory language or would have made
the regulations unreasonably long and complex. Those
suggestions were rejected. [Id., 1978-2 C.B. at 73.]
It is clear that use of the word "includible" in the regulations
is used in the sense that the law requires inclusion. Those
regulations remained in effect for 17 years and apply to the
years in issue. I believe that section 1.83-6(a)(1), Income Tax
Regs., is a proper interpretation of the requirements of section
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