126 T.C. No. 10
UNITED STATES TAX COURT
ROBERT J. MERLO, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 21538-03. Filed April 25, 2006.
P exercised incentive stock options on Dec. 21,
2000, acquiring 46,125 shares of E stock. As a result,
under I.R.C. secs. 55(b)(2), 56(b)(3), and 83(a), P was
required to include $1,066,064, the spread between the
exercise price and the fair market value of the shares
of E stock on the date of exercise, in his alternative
minimum taxable income in 2000. Instead, P included
only $452,025, the spread between the exercise price
and the fair market value of the shares of E stock on
Apr. 15, 2001.
In 2001, E filed for bankruptcy, and P’s shares of
E stock became worthless. Under I.R.C. sec. 165(g)(1),
P realized a capital loss for alternative minimum tax
purposes of $1,075,289 in 2001.
R determined a deficiency of $169,510 in P’s 2000
Federal income tax. P maintains that the capital loss
limitations of I.R.C. secs. 1211 and 1212 do not apply
for purposes of the alternative minimum tax. As a
Page: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011