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has occurred is the extent to which the transferee incurs the
risk that the value of the property at the time of transfer will
decline. Sec. 1.83-3(a)(6), Income Tax Regs.
As of July 14, 2000, petitioner could dispose of his Primus
stock as he saw fit. In fact, according to his notice,
petitioner provided for the sale on July 14, 2000, of all of the
Primus shares he obtained by exercising his stock options. This
sale would have taken place if petitioner had not again exercised
control over those shares by changing his sell order. Petitioner
also evidenced his beneficial ownership interest in the Primus
shares by using at least some of those shares as collateral for
the funds he borrowed from Piper Jaffray. Petitioner used credit
from Piper Jaffray to fund $385,170.74 of the $385,711.80 paid to
Primus for withholding taxes on the exercise of the stock
options. Under petitioner’s PJ account agreement, petitioner’s
use of credit caused the securities in his account (consisting
largely of the Primus stock he purchased by exercising his stock
options) to become collateral for that credit.
Also on July 14, 2000, petitioner incurred the risk of a
beneficial owner that the value of his Primus stock would
decline. According to his notice, petitioner determined to
eliminate this risk by electing to sell all of his Primus stock
immediately after exercise. When petitioner changed his mind and
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