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II. Determination of the Warrants’ Ascertainable Fair Market
Value
Because section 83 is not applicable, the transferred
warrants are taxable in the year of grant if they had an
ascertainable fair market value at that time. See sec. 61; sec.
1.1001-1(a), Income Tax Regs. The fair market value of property
is a question of fact and only in rare and extraordinary cases
will property be considered to have no fair market value.
Schulman v. Commissioner, 93 T.C. 623, 638 (1989); sec. 1.1001-
1(a), Income Tax Regs.
Respondent’s expert testified that the warrants for Ciena
stock had no ascertainable fair market value on the date of
grant. He was not credible. Once the Court qualified him as an
expert, the performance of respondent’s expert, a former ski
instructor, went downhill fast. He inaccurately stated his
credentials, repeatedly contradicted himself, inappropriately
relied on a colleague not disclosed in his report, and insisted
that multiple errors in his report were the fault of his
“editor”. His lack of analytical rigor is exemplified by the
fact that he did not realize, until cross-examination, that the
entirety of the supporting text he relied on in the fourth
edition of a particular textbook had been deleted from the sixth
and current edition. Indeed, he conceded that two of the
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