Anthony J. Kadillak - Page 1

                                   127 T.C. No. 13                                    

                               UNITED STATES TAX COURT                                

                         ANTHONY J. KADILLAK, Petitioner v.                           
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 2860-04L.          Filed November 7, 2006.                  

                    P, as a sales assistant with Ariba Technologies,                  
               Inc. (Ariba), received incentive stock options (ISOs)                  
               subject to an employment termination restriction,                      
               whereby Ariba had the right to repurchase nonvested                    
               stock on the date of termination for its exercise                      
               price.  On Apr. 5, 2000, P exercised his ISOs and was                  
               transferred all vested stock.  The nonvested stock was                 
               placed in escrow and transferred to P as the shares                    
               vested on a monthly basis over 4 years.  P timely filed                
               a sec. 83(b), I.R.C., election in May 2000 for the                     
               exercised ISOs.  P’s employment with Ariba was                         
               terminated on Apr. 4, 2001.  Ariba timely exercised its                
               repurchase rights with respect to nonvested stock.                     
                    P filed a Federal income tax return for 2000                      
               reporting the gain resulting from the exercise of the                  
               ISO on the vested and the nonvested stock for                          
               alternative minimum tax (AMT) purposes.  P subsequently                
               submitted amended returns for 2000 and 2001 in which he                
               claimed he was not subject to AMT for nonvested stock                  

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