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gains, and additional alternative minimum taxable
income (AMTI) arising from the exercise of P-H’s ISOs.
Held: P-H’s rights to the MGC shares he acquired
upon the exercise of his ISOs were not subject to a
substantial risk of forfeiture within the meaning of
sec. 83, I.R.C., and sec. 16(b) of the Securities
Exchange Act of 1934. Held, further: R’s
determinations Ps failed to report wages, capital
gains, and AMTI arising from the exercise of P-H’s ISOs
are sustained in that (1) R properly applied the
$100,000 annual limit imposed on ISOs under sec.
422(d), I.R.C., (2) Ps are not entitled to carry back
capital losses to 2000, and (3) Ps are not entitled to
carry back alternative tax net operating losses to
2000. Held, further: Ps are not liable for an
accuracy-related penalty for 2000 under sec.
6662(b)(2), I.R.C.
Duncan C. Turner and Brian G. Isaacson, for petitioners.
Kirk M. Paxson, Julie L. Payne, and William C. Schmidt, for
respondent.
HAINES, Judge: Respondent determined a deficiency of
$417,601 in petitioners’ Federal income tax for 2000 and an
accuracy-related penalty of $83,520 under section 6662(b).1 All
references to petitioner in the singular are to petitioner Nield
Montgomery.
1 Unless otherwise indicated, section references are to the
Internal Revenue Code, as amended, and Rule references are to the
Tax Court Rules of Practice and Procedure.
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