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dispositions; i.e., transfers or sales of stock prior to the
expiration of the holding periods required under section
422(a)(1). Taking into account the effects of section 422(d) and
petitioner’s disqualifying dispositions of MGC shares, respondent
determined that petitioners failed to report gross income (wages
and capital gains) subject to regular tax, and they failed to
compute properly their AMT for 2000.
B. Petitioners’ Contentions
Petitioners first contend they were not obliged to recognize
any income related to the shares of stock petitioner acquired
upon the exercise of his ISOs during the taxable year 2000
because petitioner’s rights in the MGC shares in question were
subject to a substantial risk of forfeiture during 2000.
Specifically, petitioner maintains he was a statutory insider of
MGC throughout 2000, and he could have been sued by MGC or
another MGC shareholder under section 16(b) of the Exchange Act
and forced to disgorge the profits he realized when he sold his
MGC shares. See sec. 83(c)(3).
In the alternative, petitioners assert they incurred
capital losses or alternative tax net operating losses (ATNOLs)
in years subsequent to the taxable year 2000, and such losses may
be carried back to reduce their AMTI for 2000. Petitioners
contend that for AMT purposes (1) capital losses are not subject
to the $3,000 limitation imposed under section 1211, and (2)
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