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stock were subject to a substantial risk of forfeiture until a
1-year sellback provision lapsed. The employer in Robinson could
have compelled its employee to sell the shares of stock back to
it at the price the employee paid at the time he exercised his
stock option if the employee attempted to sell the shares of
stock within a year of exercising his stock option.
Robinson is distinguishable from the instant case on its
facts. Petitioner has not shown that Exodus could have ever
compelled him to return his shares of stock. The remedy chosen
expressly by Exodus to enforce its insider trading policy was not
a forfeiture of the shares, but disciplinary proceedings against
the offending employee, up to and including involuntary
termination of employment.
The Court of Appeals for the Ninth Circuit, citing section
1.83-3(c)(1), Income Tax Regs., has noted that “The risk of
forfeiture analysis requires a court to determine the chances the
employee will lose his rights in property transferred by his
employer.” Theophilos v. Commissioner, 85 F.3d 440, 447 n.18
(9th Cir. 1996), revg. on another issue T.C. Memo. 1994-45.
The evidence in the instant case shows that petitioner had
no substantial risk of losing the rights to his shares of Exodus
stock. There is no evidence that Exodus could have ever
compelled petitioner to return his shares after he exercised his
ISO; no sellback provision is present; nor is there any evidence
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