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forfeiture” and rendered the stock non-transferable for
one year on its own terms, not because of Section 422.
No such agreement exists in the present case. When you
acquired the stock in early 2000 it was acquired
without restriction.
The provisions of IRC Section 422 impose no restriction
on the sale of stock. They do provide favorable tax
treatment if the stock is held for one year. While
this might have disadvantaged you for tax purposes had
you sold the stock before holding it for a year, it in
no way restricted your ability to sell or otherwise
dispose of the stock at any point.
Your representative also argues that the Service has a
“duty of consistency” which requires that it treat the
options as subject to * * * [AMT] in 2001, not 2000.
In support of that he cites Estate of Hilda Ashman,
CA-9, * * * [2000-2] USTC 50,806. In short, that case
states that a taxpayer cannot take a position which is
to his advantage in one year and then take an opposite
position after that year is barred by the statute of
limitations. The statutes for both 2000 and 2001 are
still open by virtue of your claim for refund. In
Orange Securities Corp., CA-5, 42-2 USTC 9735, the
Court held that there is a “duty of consistency on both
the taxpayer and the Commissioner”.
You originally filed your 2000 return and reported the
* * * [AMT] for that year. The Service accepted that
return. When you filed amended returns for both 2000
and 2001 to shift the * * * [AMT] to the later year the
Service accepted the amended return for 2001 but not
the one for 2000. Thus you found yourselves assessed
very substantial * * * [AMT] for both years for the
same underlying exercise of stock options. Your
representative argues that since the Service accepted
the amended return for 2001 and assessed the * * *
[AMT] shown thereon, it must–-to be consistent–-accept
the amended return for 2000 and abate the AMT for that
year.
The Service has not taken inconsistent positions. It
has consistently argued that the liability attaches to
2000. Further, the Service has taken the position that
the resolution of the inconsistency can be achieved by
simply abating the AMT for 2001. This is the position
taken by the Revenue Agent in the examination of the
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Last modified: November 10, 2007