- 14 -
year.8 Id. at 30376. We, therefore, find petitioner’s argument
to be without merit.
We conclude that the 6-month period of section 16(b) began
at the “purchase” date--the date of the grant of the option. If
we consider solely the liability created by section 16(b), the
section 16(b) period expired before the option was exercised, and
section 83(c)(3) is not applicable.
5. Does the Lockup Agreement Extend the 6-month Period of
Section 16(b) to 2 Years?
Petitioner further argues that the lockup agreement provided
by contract that petitioner would be subject to section 16(b) for
2 years instead of only the statutory period of 6 months.
Respondent argues that there is no provision in section 16(b)
that allows individuals to voluntarily subject themselves to
liability under the statute.
Section 83(c)(3) applies only “So long as the sale of the
property at a profit could subject a person to suit under section
16(b)”. Section 1.83-3(j)(1), Income Tax Regs., provides:
For purposes of section 83 and the regulations
thereunder if the sale of property at a profit within
six months after the purchase of the property could
subject a person to suit under section 16(b) of the
Securities Exchange Act of 1934, the person’s rights in
8 We note that discretionary transactions are not excluded
in the 1991 version of this regulation. See Final rules and
solicitation of comments: Ownership Reports and Trading by
Officers, Directors and Principal Security Holders, 56 Fed. Reg.
at 7270.
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