Kevin B. Kimberlin and Joni R. Steele, et al. - Page 13

                                       - 13 -                                         
          II. Determination of the Warrants’ Ascertainable Fair Market                
               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                   

Page:  Previous  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  Next 

Last modified: November 10, 2007