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$3 per share, regardless of the current market price of the
stock. In the agreement, it was recognized that Ms. Lima was
entitled to one-half of these options, including one-half of the
proceeds from some of the options petitioner had exercised a few
months earlier (during 2000), and, as to which, petitioner had
elected to take cash in lieu of stock. After the agreement was
executed, petitioner exercised additional options and remitted
the net entire proceeds from both transactions to Ms. Lima, even
though he was required to remit only one-half to her. For our
purposes here, the stock purchased in both transactions cost
$6,817 (at $3 per share), and the gross proceeds from sale of the
stock were $27,794, resulting in a gain and net proceeds of
$20,977, all of which petitioner paid to Ms. Lima.
On his Federal income tax return for 2000, petitioner
claimed an alimony deduction of $20,977. In the notice of
deficiency, respondent disallowed the deduction and made no other
adjustments (except for the computational adjustments on the
itemized deductions).
The sole issue is whether petitioner is entitled to a
$20,977 deduction for alimony under section 215(a).3
3 The Court decides this case without regard to the
burden of proof under sec. 7491(a), since the facts are not in
dispute and the issue is a question of law.
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