- 47 -
83(h). This interpretation is supported by Duncan Indus., Inc.
v. Commissioner, 73 T.C. 266, 285 (1979), where we stated:
Section 83(h) expressly allows the person for whom the
services were performed to deduct an amount equal to
the amount includable in the service performer's income
under section 83(a). * * * [Emphasis added.]
The majority's interpretation of section 83 conflicts with
the interpretation contained in section 1.83-6(a)(1), Income Tax
Regs. The majority attempts to reconcile this conflict by
describing the regulations as being an "employer friendly" "safe
harbor". But such rationalization is only necessary because of
the majority's strained interpretation of the term "included".
If given a choice between two possible interpretations, we should
choose the one that is reasonable and practical rather than
assume that Congress intended to set standards for deductions
that are impractical, if not impossible, to meet.8 See United
States v. American Trucking Associations, Inc., 310 U.S. 534, 543
(1940). The more reasonable and practical interpretation, and
the one contained in the applicable interpretative regulations,
is that a deduction under section 83(h) is allowed for the
employer's taxable year that coincides with the taxable year in
which the compensation is "includible" in the service provider's
income.
8Indeed, were we to interpret "included" as meaning
reported, an employer could arguably take the deduction in any
amount for any year that matches the employee's reporting
position.
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