Mitchell v. Commissioner
United States Tax Court
Petitioner received a nonstatutory stock option in exchange for a compensatory restricted stock option and a reduction in his salary. Petitioner then disposed of the nonstatutory stock option in an installment sale. Held, the nonstatutory stock option represented compensation to petitioner even though part was granted in exchange for the restricted option and part was granted to make up for his salary reduction.
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Petitioner received a nonstatutory stock option in exchange for a compensatory restricted stock option and a reduction in his salary. Petitioner then disposed of the nonstatutory stock option in an installment sale. Held, the nonstatutory stock option represented compensation to petitioner even though part was granted in exchange for the restricted option and part was granted to make up for his salary reduction. Held, further: The nonstatutory stock option had no readily ascertainable fair market value when received and, therefore, no gain was realized until the date of sale. Petitioner must…
1Opinion of the Court
OPINION
In 1966 Royal Industries, Inc., acquired all of petitioner’s stock in Amerco, Inc., for $4 per share and, in addition, acquired petitioner’s 22,137-share Amerco stock option. Petitioner remained in the employ of Amerco after the Royal takeover at a reduced salary and received a nonstatutory stock option to purchase 10,000 shares of Royal stock.
The issues remaining to be decided are whether the Royal option granted to petitioner in 1966 was granted in exchange for petitioner’s Amerco option or in lieu of salary, whether extrinsic evidence is admissible to show the consideration given…
2Cases cited14 opinions
- Commissioner v. LoBueSupreme Court of the United States · 1956
- United States v. DavisSupreme Court of the United States · 1962
- Commissioner v. DanielsonCourt of Appeals for the Third Circuit · 1967
- Philadelphia Park Amusement Co. v. United StatesUnited States Court of Claims · 1954
- Raymond A. Rank v. United StatesCourt of Appeals for the Fifth Circuit · 1965
9 more not listed; retrieve them via the Exa API.
3Cited by14 opinions
- Bagley v. CommissionerUnited States Tax Court · 1985
- Raymond B. Mitchell and Beverly Mitchell v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1979
- Simmonds Precision Prods. v. Comm'rUnited States Tax Court · 1980
- Estate of Siegel v. CommissionerUnited States Tax Court · 1980
- Weigl v. CommissionerUnited States Tax Court · 1985
9 more not listed; retrieve them via the Exa API.