Kevin B. Kimberlin and Joni R. Steele, et al. - Page 1















                                   128 T.C. No. 13                                    


                               UNITED STATES TAX COURT                                


           KEVIN B. KIMBERLIN AND JONI R. STEELE, ET AL.1, Petitioners v.             
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      


               Docket Nos. 24499-04, 24500-04,  Filed May 8, 2007.                    
                           8752-05.                                                   

                    X and Y entered into a private placement agreement,               
               pursuant to which X would serve as the placement agent for             
               the sale of Y’s preferred stock.  Y did not adhere to the              
               agreement.  A dispute ensued and was later settled.                    
               Pursuant to the settlement agreement, in 1995 Y issued to X            
               warrants to purchase shares of Y preferred stock.  In 1997,            
               the warrants were exercised.  R, in his notices of                     
               deficiency, determined that the warrants were transferred in           
               connection with the performance of services, and the income            
               from the warrants is taxable in 1997 pursuant to sec. 83,              
               I.R.C.                                                                 



               1  Cases of the following petitioners are consolidated                 
          herewith:  Kevin Kimberlin Partners Ltd. Partnership, Kevin B.              
          Kimberlin, Tax Matters Partner, docket No. 24500-04; and Spencer            
          Trask & Co. and Subsidiary f.k.a. Spencer Trask Holdings, Inc.              
          and Subsidiary, docket No. 8752-05.                                         





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