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Respondent determined a deficiency in the amount of $167 in
petitioner’s 1999 Federal income tax. This Court must decide
whether a payment received by petitioner’s spouse from her
employer in exchange for the termination of employee stock
options is taxable as a capital gain or ordinary income and
whether petitioner is entitled to a credit for payment of excess
Subtitle C-Employment Taxes. Secs. 6211(a), 6214, 7442 (FICA
taxes).
Some of the facts in this case have been stipulated and are
so found. Petitioner resided in Manteca, California, at the time
he filed his petition.
During 1999, petitioner was married to Darla K. Buckley
(Mrs. Buckley). Mrs. Buckley was employed by BFI Waste Systems
of North America, Inc. (Systems) in 1999. As part of Mrs.
Buckley’s employment by Systems, she was granted options to
purchase 300 shares of Systems stock. In 1999, Systems merged
with another company. The Systems Stock Option “Merger Plan”
provided that Mrs. Buckley would receive $4,650 on the
cancellation of her stock options. Mrs. Buckley’s stock options
were canceled in 1999 for $4,650.
Systems issued a Form W-2, Wage and Tax Statement, to Mrs.
Buckley for 1999. Wages of $53,937 (all amounts are rounded)
were reported on the Form W-2. The $53,937 wage amount included
the $4,650 payment received by Mrs. Buckley for her canceled
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Last modified: May 25, 2011