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are not liable for the accuracy-related penalty under section
6662(b).
FINDINGS OF FACT
Some facts have been stipulated and are so found. The
parties’ stipulations of facts, with attached exhibits, are
incorporated herein by this reference. At the time the petition
was filed, petitioners (husband and wife) resided in Las Vegas,
Nevada.
A. MGC Communications, Inc.
In 1995, petitioner cofounded NevTEL, Inc., subsequently
renamed MGC Communications Inc. (MGC),4 to engage in the business
of providing local telephone service in Nevada. Petitioner
served as MGC’s president and chief executive officer from 1995
to November 1999. During the period in question, MGC’s common
stock was publicly traded on the NASDAQ market system, and MGC
was subject to the reporting requirements of the Exchange Act.
MGC shares were subject to a 6-for-10 reverse stock split in
May 1998 and a 3-for-2 stock split in August 2000. Unless
otherwise indicated, all data (including tables) set forth below
reflect these stock splits.
1. MGC Communications, Inc. Stock Option Plan
In 1996, MGC adopted the MGC Communications, Inc. Stock
4 Although MGC Communications, Inc., was subsequently
renamed Mpower Communications, Inc., we shall refer to the
corporation as MGC.
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