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occur, such as the termination of employment. In such a
case, whether there is, in fact, a transfer depends
upon all the facts and circumstances. Factors which
indicate that no transfer has occurred are described in
paragraph (a) (4), (5), and (6) of this section.
* * * .
* * * * * * *
(5) Relationship to fair market value. An indication
that no transfer has occurred is the extent to which
the consideration to be paid the transferee upon
surrendering the property does not approach the fair
market value of the property at the time of surrender.
* * * .
[Emphasis added.]
Whether property is “transferred under conditions that
require its return upon the happening of an event that is certain
to occur”, depends on a facts and circumstances analysis.17 Sec.
1.83-3(a)(3), Income Tax Regs. Section 1.83-3(a)(5), Income Tax
Regs., is one factor to consider when determining whether a valid
transfer occurred. However, it is unnecessary to reach the facts
and circumstances analysis in cases where a “condition certain to
occur” has not been established.
Although the restriction placed upon petitioner’s nonvested
shares is conditioned upon his termination, all the stock could
17 The factors considered indicative that no transfer has
occurred, include the following: (1) The extent to which the
arrangement is similar to an option, sec. 1.83-3(a)(4), Income
Tax Regs.; (2) the extent to which the consideration to be paid
the transferee upon surrender is less than the FMV of the
property, sec. 1.83-3(a)(5), Income Tax Regs.; and (3) the extent
to which the transferee does not incur the risk of a beneficial
owner (i.e., the extent to which the transferee does not bear the
risk of loss with respect to the investment as well as the
opportunity for gain), sec. 1.83-3(a)(6), Income Tax Regs.
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