Robert J. Merlo - Page 8

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          v. Commissioner, 117 T.C. 237, 242 (2001), affd. 65 Fed. Appx.              
          508 (5th Cir. 2003); sec. 1.83-7(a), Income Tax Regs.                       
               Caselaw establishes that a restriction on the                          
          transferability of property does not affect the timing of income            
          inclusion or the amount of income required to be included under             
          section 83 if the property is not subject to a substantial risk             
          of forfeiture.  See Pledger v. Commissioner, 71 T.C. 618 (1979),            
          affd. 641 F.2d 287 (5th Cir. 1981); Sakol v. Commissioner, 67               
          T.C. 986 (1977), affd. 574 F.2d 694 (2d Cir. 1978); Koss v.                 
          Commissioner, T.C. Memo. 1989-330, affd. 908 F.2d 962 (3d Cir.              
          1990).                                                                      
               Under section 83(c)(3), if a taxpayer selling his shares of            
          stock could be subject to a suit under section 16(b) of the                 

               2(...continued)                                                        
               any person other than the person for whom such services                
               are performed, the excess of--                                         
                    (1) the fair market value of such property                        
               (determined without regard to any restriction other                    
               than a restriction which by its terms will never lapse)                
               at the first time the rights of the person having the                  
               beneficial interest in such property are transferable                  
               or are not subject to a substantial risk of forfeiture,                
               whichever occurs earlier, over                                         
                    (2) the amount (if any) paid for such property,                   
               shall be included in the gross income of the person who                
               performed such services in the first taxable year in                   
               which the rights of the person having the beneficial                   
               interest in such property are transferable or are not                  
               subject to a substantial risk of forfeiture, whichever                 
               is applicable. * * *                                                   





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