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Background
The parties submitted this case fully stipulated pursuant to
Rule 122.2 The parties’ first through fifth stipulations of
facts, along with the attached exhibits, are incorporated herein
by this reference. Petitioners (husband and wife) resided in
Fairlawn, New Jersey, at the time the petition was filed. All
references to petitioner in the singular are to petitioner Evan
Marcus.
On October 14, 1996, petitioner began employment as Senior
Staff Systems Engineer at Veritas Software Corporation (Veritas).
He was employed by Veritas through 2001. As part of his
compensation package, petitioner was granted several ISOs to
purchase Veritas common stock.3
Petitioner exercised ISOs in transactions beginning November
18, 1998, and ending March 10, 2000, acquiring 40,362 shares of
Veritas common stock. Petitioner paid $175,841 to exercise the
ISOs, acquiring shares with an aggregate fair market value of
$5,922,522 on the various dates of exercise. Petitioners held
their Veritas shares for investment purposes and not as dealers
2Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended. All Rule references are
to the Tax Court Rules of Practice and Procedure, unless
otherwise indicated. Amounts are rounded to the nearest dollar.
3During the years in question, Veritas shares underwent a
number of stock splits. All data set forth below reflect these
stock splits.
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Last modified: November 10, 2007