-18- We finally consider the likelihood the purchase price will be paid. Sec. 1.83-3(a)(2), Income Tax Regs. This factor examines whether the purchase price for the property is paid, not whether the indebtedness incurred to pay the purchase price will be paid. Hilen v. Commissioner, supra; Facq v. United States, supra; Miller v. United States, supra. InfoSpace received the exercise price of the shares (plus amounts from Mr. Facq’s margin account to fund the tax withholding payments) when Mr. Facq exercised his options. Accordingly, this factor also weighs against finding that the substance of the transaction was the same as the grant of an option. Hilen v. Commissioner, supra. In summary, the facts and circumstances, including the three specified factors, indicate that in substance, Mr. Facq’s use of his margin account to exercise his options to buy InfoSpace stock was not the same as the grant of an option. See Hilen v. Commissioner, supra; Palahnuk v. United States, supra; Facq v. United States, supra; Miller v. United States, supra. We therefore find that a transfer of stock occurred under section 83 when Mr. Facq exercised his stock options in 2000 and that the exception treating some transfers as grants of options does not apply to this case. We accordingly sustain respondent’s determination that Mr. Facq received income in 2000 when he exercised his options. We next consider whether petitioners are liable for the accuracy-related penalty.Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
Last modified: May 25, 2011