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sellback provision is present; nor is there any evidence that
InsWeb could have compelled petitioner to forfeit his shares of
stock.3
Finally, petitioner alleges that his inability to sell his
shares of InsWeb common stock as their fair market value declined
resulted in his beneficial interests in the shares having been
“constructively forfeited” under section 1.83-1(e), Income Tax
Regs.
Section 1.83-1(e), Income Tax Regs., provides:
If a person is taxable under section 83(a) when the
property transferred becomes substantially vested and
thereafter the person’s beneficial interest in such
property is nevertheless forfeited pursuant to a lapse
restriction, any loss incurred by such person * * *
upon such forfeiture shall be an ordinary loss to the
extent the basis in such property has been increased as
a result of the recognition of income by such person
under section 83(a) with respect to such property.
Section 1.83-1(e), Income Tax Regs., is not applicable to
petitioner’s case. There is no evidence of forfeiture pursuant
to a lapse restriction, nor was petitioner’s right to the shares
3 Under sec. 83(c)(3), if a taxpayer selling his shares of
stock at a profit could be subject to a suit under the Securities
Exchange Act of 1934, ch. 404, sec. 16(b), 48 Stat. 896 (current
version at 15 U.S.C. sec. 78p(b)(2000)), “such person’s rights in
such property are (A) subject to a substantial risk of
forfeiture, and (B) not transferable.” Sec. 83(c)(3) does not
apply beyond the initial 6-month period provided in sec. 16(b) of
the Securities Exchange Act of 1934. Tanner v. Commissioner, 117
T.C. 237, 245-256 (2001), affd. 65 Fed. Appx. 508 (5th Cir.
2003).
Petitioner does not claim that he would have been subject to
liability under sec. 16(b) of the Securities Exchange Act of 1934
upon sale of his shares of InsWeb common stock at a profit.
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