Judith A. Madden - Page 6

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          of $614,205, payments of $472,903, and $141,302 due with the                
          return. Petitioner and Mr. Sturges did not remit the $141,302               
          with the return.  Mr. Sturges attached to the return a letter               
          advising the Internal Revenue Service (IRS) that he would be                
          filing a Form 656, Offer in Compromise, and a Form 433-A,                   
          Collection Information Statement for Individuals.                           
              Petitioner and Mr. Sturges attached to the joint return a               
         document entitled “Section 83(b) Election” pursuant to which Mr.             
         Sturges elected to include the value of 190,167 shares of Tiburon            
         restricted stock in his gross income for 2000, the year the stock            
         was transferred to him.  The document stated that each share had             
         a value of 30 cents on October 23, 2000, the date the shares were            
         transferred to him, and that Mr. Sturges had paid $57,050.10 for             
         the stock.                                                                   
              By August 2001, petitioner and Mr. Sturges had approximately            
         $13,000 remaining in their Paine Webber accounts.  When                      
         petitioner signed the 2000 return, she and Mr. Sturges did not               
         have $141,302 to pay the tax shown as owed on the return.  She               
         discussed the unpaid tax liability with Mr. Sturges.  Mr. Sturges            
         told petitioner that he did not have the money to pay the                    
         outstanding tax because he had “entrusted” all the funds to Paine            
         Webber but that he had enough Tiburon options to cover the tax               

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