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 aPage: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
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