Luckman v. Commissioner
United States Tax Court
Rapid American Corp. had granted restricted stock options under sec. 421, I.R.C. 1954, which were exercised at times when the market value of the stock greatly exceeded the option price. Petitioners contend that this excess is deductible from Rapid's earnings and profits so that dividends paid to petitioners in 1961 were returns of capital rather than dividend income.
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Rapid American Corp. had granted restricted stock options under sec. 421, I.R.C. 1954, which were exercised at times when the market value of the stock greatly exceeded the option price. Petitioners contend that this excess is deductible from Rapid's earnings and profits so that dividends paid to petitioners in 1961 were returns of capital rather than dividend income. Held: Since under sec. 421 (a)(3), I.R.C. 1954, no amount other than the option price may be considered as received by Rapid, it follows that Rapid may not consider that an expense was generated or satisfied by the options.…
1Opinion of the Court
Sid Luckman and Estelle Luckman, Petitioners v. Commissioner of Internal Revenue, Respondent
Luckman v. Commissioner
Docket No. 3959-65
United States Tax Court
50 T.C. 619; 1968 U.S. Tax Ct. LEXIS 96;
July 24, 1968, Filed
Decision will be entered under Rule 50.
Rapid American Corp. had granted restricted stock options under sec. 421, I.R.C. 1954, which were exercised at times when the market value of the stock greatly exceeded the option price. Petitioners contend that this excess is deductible from Rapid's earnings and profits so that dividends paid to petitioners in 1961 were returns of capital…
2Cases cited13 opinions
- Commissioner v. South Texas Lumber Co.Supreme Court of the United States · 1948
- Commissioner v. LoBueSupreme Court of the United States · 1956
- Commissioner v. SmithSupreme Court of the United States · 1945
- Stein v. CommissionerUnited States Tax Court · 1956
- Lazarus I. Levine and Norman L. Marks, Executors of the Estate of Samuel Stein v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1958
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