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prior year; (2) it appeared that the taxpayer had an unrestricted
right to the item in the prior year; and (3) the taxpayer is
entitled to a deduction (in excess of $3,000) under another
section of the Code for the loss resulting from the restoration
of the item to another in the current tax year. Sec. 1341(a);
sec. 1.1341-1(a)(1), Income Tax Regs.
Section 1.1341-1(a)(2), Income Tax Regs., continues with the
definition:
“income included under a claim of right” means an item
included in gross income because it appeared from all
the facts available in the year of inclusion that the
taxpayer had an unrestricted right to such item, and
“restoration to another” means a restoration resulting
because it was established after the close of such
prior taxable year (or years) that the taxpayer did not
have an unrestricted right to such item (or portion
thereof).
Although petitioner may recognize losses on the sale of
stock for AMT purposes, there is no deduction for a loss
attributable to a forfeited nonvested share of stock subject to a
section 83(b) election. Pursuant to section 83(b)(1), if
property to which a section 83(b) election is made “is
subsequently forfeited, no deduction shall be allowed in respect
of such forfeiture.”
Similarly, pursuant to section 1.83-2(a), Income Tax Regs.:
If property for which a section 83(b) election is in
effect is forfeited while substantially nonvested, such
forfeiture shall be treated as a sale or exchange upon
which there is realized a loss equal to the excess (if
any) of--
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