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brief, in support of his position that the accuracy-related
penalty should not be imposed with respect to the mining
deductions or the exercise of Zila stock options. Petitioner,
however, did not present any evidence concerning the accuracy-
related penalty as it relates to the remaining settled or
computational issues. Consequently, we hold that petitioner has
failed to prove that the accuracy-related penalty should not
apply with respect to the remaining settled and computational
issues. See Rule 149(b). We sustain respondent’s determination
as to the settled and computational issues, excluding only the
adjustment with respect to petitioner’s exercise of his Zila
stock options discussed separately below.
B. Exercise of Zila Stock Options
In 1993, petitioner was required to report ordinary income
of $548,271 from his exercise of stock options to purchase
380,000 shares of Zila, after taking into account an exercise
price of $285,000 and Zila’s per-share blockage discount of
$282,979. On petitioner’s 1993 Federal income tax return,
however, he reduced the amount of ordinary income derived from
his exercise of his Zila stock options (and shown on a Form 1099
issued to him) by an additional $282,979, claiming that he was
entitled to an additional discount because the sale of the shares
was restricted. Petitioner disclosed this additional discount on
a schedule that fully described the total options exercised, the
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