-30-
As was true in the case of petitioners’ previous argument,
this argument was considered and rejected by the Court of Appeals
for the Ninth Circuit in United States v. Tuff, supra at 1255-
1257. We do likewise here. A taxpayer’s rights in property
generally are subject to a substantial risk of forfeiture if the
taxpayer’s rights to full enjoyment of the property are
conditioned upon the future performance (or refraining from
performance) of substantial services, sec. 1.83-3(c)(1), Income
Tax Regs.; a taxpayer’s rights in property are transferable only
if the rights in such property of any transferee are not subject
to a substantial risk of forfeiture, sec. 83(c)(2). Petitioners
make no claim that petitioner’s rights to retain her CTI stock
were conditioned upon the future performance (or nonperformance)
of any services or the occurrence of any condition related to a
purpose of the transfer. In fact, petitioner’s consulting
agreement had terminated when she exercised the options, so her
rights to retain the shares were not conditioned on the future
performance or nonperformance of services. Nor do petitioners
argue that petitioner was subject to any risk, substantial or
otherwise, that she would have to return the stock to CTI at any
time after she exercised her options on March 5, 2002. To the
contrary, petitioners stipulated that at no time after exercising
her CTI stock options was petitioner under any obligation to
return the stock to CTI and that during 2002 and thereafter,
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