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Exodus filed bankruptcy on September 26, 2001. In a press
release dated November 12, 2001, Exodus announced that the
company’s common stock had no value.
On his 2000 Form, 1040, U.S. Individual Income Tax Return,
petitioner included in his alternative taxable income for
alternative minimum tax (AMT) purposes $452,025, the excess of
the price for Exodus common stock reported on NASDAQ on April 15,
2001, over the price he paid for the stock. Petitioner did not
use the stock’s fair market value on the December 21, 2000, ISO
exercise date. Instead, petitioner filed Form 8275-R, Regulation
Disclosure Statement, disclosing that he relied on proposed
legislation H.R. 2794, 107th Cong., 1st Sess. (2001), then
pending in Congress, to use the stock’s fair market value on
April 15, 2001. The proposed legislation would have allowed
taxpayers to use the difference between the amount paid for
shares purchased pursuant to the exercise of an ISO during 2000
and the fair market value of such shares on April 15, 2001, for
purposes of computing their AMT. H.R. 2794, 107th Cong., 1st
Sess. (2001), was never enacted.
On November 13, 2003, respondent mailed petitioner a notice
of deficiency, in which respondent determined a deficiency of
$4,833 in petitioner’s 1999 Federal income tax and a deficiency
of $169,510 in petitioner’s 2000 Federal income tax. In the
notice of deficiency respondent stated:
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Last modified: May 25, 2011