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because the sec. 83(b), I.R.C., election was invalid.
P also claimed that the capital loss limitations of
secs. 1211 and 1212, I.R.C., do not apply for purposes
of the AMT so that he may use his capital losses
realized in 2002 to reduce his alternative minimum
taxable income (AMTI) in 2000. R rejected P’s amended
returns and issued to P a notice of Federal tax lien
and notice of intent to levy. After a sec. 6330,
I.R.C., hearing, the Appeals Office rejected P’s
arguments, and P timely petitioned this Court for
review of R’s lien and levy.
Held: P’s sec. 83(b), I.R.C., election required
him to recognize as AMTI the excess of his vested and
nonvested stock’s fair market value (FMV) over its
exercise price on the date of exercise. Held, further:
P acquired beneficial ownership of the nonvested stock
when he exercised his ISOs; thus, the nonvested shares
were transferred to P within the meaning of sec. 1.83-
3(a)(1), Income Tax Regs. Held, further: P was not
required to return the nonvested stock upon the
happening of an event that was certain to occur
pursuant to sec. 1.83-3(a)(3), Income Tax Regs.; thus,
the nonvested shares were properly transferred to P
within the meaning of sec. 1.83-3(a)(1), Income Tax
Regs. Held, further: P is not entitled to a deduction
under sec. 1341(a), I.R.C. Held, further: The capital
loss limitations of secs. 1211 and 1212, I.R.C., apply
for purposes of calculating alternative minimum taxable
income. Held, further: P may not carry back
alternative minimum tax net operating losses to reduce
his AMTI in 2000.
Don Paul Badgley, Duncan C. Turner, and Brian G. Isaacson,
for petitioner.
Kirk M. Paxson, Julie L. Payne, and William C. Schmidt, for
respondent.
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