Jorge O. and Clelia E. Svoboda - Page 10

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          by the option holder within 2 years of the granting of the option           
          or within 1 year after the stock's transfer to him, section 421             
          does not apply, and the stock's acquisition and sale are taxed              
          under the provisions of section 83.  Sec. 422(a)(1); Spitz v.               
          Commissioner, supra; sec. 14a.422A-1, Q&A-2(a), Temporary Income            
          Tax Regs., 46 Fed. Reg. 61840 (Dec. 21, 1981).                              
               Petitioners contend that petitioner acquired the Fluor stock           
          at issue pursuant to ISOs.  Their only evidence for this claim is           
          petitioner's testimony to that effect.  All other evidence in the           
          record points to the contrary conclusion that the options                   
          petitioner held were nonqualified options.  The computation                 
          worksheets provided to petitioner by Fluor concerning the two               
          stock option transactions were each entitled "Computation                   
          Worksheet for Non-Qualified Stock Option Exercise for Shares",              
          and each described the difference between the option price and              
          the fair market value of the stock at exercise as either the                
          "wage element" or "taxable compensation".  The Form W-2 issued by           
          Fluor to petitioner reported the proceeds from the stock option             
          transactions under the "Nonqualified plans" category.  Finally,             
          Fluor collected withholding taxes with respect to the proceeds,             
          which would not have been required with respect to the                      
          disposition of stock acquired pursuant to an ISO.7  See Notice              


               7 Moreover, had petitioner been granted ISOs (as he claims)            
          which were exercised in 2002, he would have had alternative                 
          minimum taxable income in 2002 measured by the excess of the                
                                                             (continued...)           




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