- 16 - the tax withholding payments) when she exercised her options. Consequently, this factor also weighs against finding that the substance of the transaction was the same as the grant of an option. Facq v. Commissioner, supra; Hilen v. Commissioner, supra. In summary, the facts and circumstances indicate that in substance, Mrs. Racine’s use of her margin account to exercise her options to buy Allegiance stock was not the same as the grant of an option. Therefore, we find that a transfer of stock occurred under section 83 when Mrs. Racine exercised her stock option in 2000 and that the exception treating some transfers as grants of options does not apply. Accordingly, we sustain respondent’s determination that Mrs. Racine received income in 2000 when she exercised her options. II. Accuracy-Related Penalty We next consider whether petitioners are liable for the accuracy-related penalty. Section 6662 imposes an accuracy-related penalty on the portion of an underpayment attributable to negligence or disregard of the rules or regulations. Sec. 6662(b)(1). The term “negligence” includes any failure to make a reasonable attempt to comply with the provisions of the internal revenue laws or to exercise ordinary and reasonable care in thePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
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