- 23 - certain to occur. It follows that consideration of section 1.83- 3(a)(5), Income Tax Regs., is unnecessary because the prerequisite condition was not satisfied. Accordingly, the stock was properly transferred to petitioner pursuant to section 83(b) when petitioner exercised option No. 117.19 After petitioner exercised option No. 117 on April 5, 2000, he made a timely section 83(b) election applicable to all the nonvested stock subject to the employment restriction. As a result, he recognized AMTI in 2000 to the extent the FMV of the underlying shares of stock on the date of exercise exceeded the option price. See sec. 83. E. Claim of Right If the section 83(b) election is valid, petitioner argues that because he forfeited 6,667 shares of nonvested Ariba stock for its exercise price on May 30, 2001, he is entitled to a 2001 tax deduction under section 1341(a) equal to the 2000 AMT attributable to the inclusion of AMTI of $679,825. A taxpayer qualifies for a deduction under section 1341 if (1) an item was included in the taxpayer’s gross income in a 19 Petitioner also argues that the transfer of nonvested stock was invalid because it was subject to the claims of Ariba’s creditors. Petitioner cites the definition of property as his authority. Sec. 1.83-3(e), Income Tax Regs. There is nothing in the record to support petitioner’s claim that creditors of Ariba could reach petitioner’s shares of nonvested stock while in escrow. Furthermore, shares of stock clearly constitute property, and the nonvested shares were transferred to petitioner subject to a lapse provision.Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Next
Last modified: May 25, 2011