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substantial services. Resolution of the issue before us turns on
the date of the transfer of the shares to petitioner. See sec.
1.83-3(a), Income Tax Regs. For purposes of section 83 and the
regulations thereunder, a transfer of property occurs when a
person acquires a beneficial ownership interest in the property.
See sec. 1.83-3(a)(1), Income Tax Regs.
Petitioner’s rights in the Primus stock subject to option
are fixed by the terms of the 1995 Plan and the stock option
letter agreements. Thus, the determination of when petitioner
acquired a beneficial interest in the Primus stock requires an
analysis of the contract provisions set forth in those documents.
These provisions define and establish when the exercise is
complete, so as to constitute a transfer of a beneficial interest
to petitioner.
We read those documents to conclude that petitioner acquired
a beneficial ownership interest in his Primus stock on the day
the notice became effective; i.e., on July 14, 2000.
Petitioner’s notice was first faxed to Primus after the close of
business on July 13, 2000, and was superseded by the second
notice faxed to Primus the next morning. The transmission of the
notice, as superseded, satisfied the requirements for exercising
the options set forth in section 7.4 of the 1995 Plan: It was a
written notice, delivered to Primus, specifying the number of
shares to be purchased, and accompanied by payment in full as
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