Kevin B. Kimberlin and Joni R. Steele, et al. - Page 2




                                        - 2 -                                         
                    Held:  R’s determination is in error because the                  
               warrants were not transferred in connection with the                   
               performance of services.                                               
                    Held, further, the warrants had an ascertainable fair             
               market value on the date of grant in 1995 and are therefore            
               taxable in that year.                                                  


               Solomon Leo Warhaftig, David Lederkramer (specially                    
          recognized), Peter Adebanjo (specially recognized), and Andre               
          Castaybert (specially recognized), for petitioners.                         
               Lydia Branch, Shawna Early, and Fredrick Mutter, for                   
          respondent.                                                                 



                                       OPINION                                        

               FOLEY, Judge:  The issues for decision in these cases are              
          whether:  (1) Warrants issued to petitioners in accordance with a           
          settlement and release agreement were transferred in connection             
          with the performance of services and therefore constitute taxable           
          income pursuant to section 83;2 (2) the warrants had a readily              
          ascertainable fair market value in 1995, on the date of grant, or           
          in 1997, the year of exercise; and (3) the payment to Kevin                 





               2  Unless otherwise indicated, all section references are to           
          the Internal Revenue Code for the years in issue, and all Rule              
          references are to the Tax Court Rules of Practice and Procedure.            





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