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affording the opportunity to profit, it should not be
an event that is matched against another transaction in
the equity securities for purposes of section 16(b)
short-swing profit recovery. [Emphases added; fn. ref.
omitted.]
Ownership Reports, supra, 56 Fed. Reg. at 7248-7249. The SEC
went on to state that “to avoid short-swing profit recovery, a
grant of an employee stock option by an issuer, absent an
exemption, must occur at least six months before or after a sale
of the equity security or any derivative security relating to the
equity security.” Id., 56 Fed. Reg. at 7251 n.120; see sec.
16(b) of the Exchange Act (last sentence authorizes the SEC to
adopt rules and regulations exempting transactions as not
comprehended within the purpose of the provision).
In Tanner v. Commissioner, 117 T.C. 237, 239 (2001), affd.
65 Fed. Appx. 508 (5th Cir. 2003), this Court held that the 6-
month period under which an insider is subject to liability under
section 16(b) of the Exchange Act begins on the date that a stock
option is granted. In Tanner v. Commissioner, supra, the
taxpayer, an officer, director, and owner of approximately 65
percent of an issuer’s stock, was granted an NSO in July 1993 to
purchase up to 182,000 of the issuer’s shares at an exercise
price of 75 cents per share. The taxpayer exercised the NSO in
September 1994, and the Commissioner determined the taxpayer was
obliged to report compensation income on his return for 1994
pursuant to section 83. The taxpayer challenged the
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