-18-
appears that the transfer to the taxpayer may be treated as
similar to the grant of an option”. This is so, the memorandum
of law rationalizes (without any coherent explanation), because
petitioner would not have to use her personal assets to pay the
margin debt were her CTI stock to be insufficient to satisfy the
debt in full. The memorandum of law stated that Isaacson was
trying to get CTI to change the referenced 2002 Form W-2 to
report the lower amount of wages but that “It is anticipated that
Cell Therapeutics, Inc. will not correct the taxpayer’s Form W-2
absent a ruling from the Internal Revenue Service”.
OPINION
A. Statutory Framework for Stock Options
Section 83(a) generally provides that when property is
transferred to a person in connection with the performance of
services, the fair market value of the property at the first time
the rights of the person having the beneficial interest in the
property are transferable or not subject to a substantial risk of
forfeiture, less the amount paid for the property, is includable
in the gross income of the person who performed the services.
See Tanner v. Commissioner, 117 T.C. 237, 241 (2001), affd.
65 Fed. Appx. 508 (5th Cir. 2003); see also United States v.
Tuff, 469 F.3d 1249, 1251-1252 (9th Cir. 2006). In general, an
employee who receives a nonstatutory stock option without a
readily ascertainable fair market value is taxed not on receipt
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Last modified: November 10, 2007