Pagel, Inc. v. Commissioner
United States Tax Court
In connection with serving as an underwriter in a stock offering, P received cash and a warrant to purchase stock. P could not transfer or exercise the warrant until at least 13 months after the date of receipt, and there was no active trading of such warrants on any established market. P later sold the warrant to its sole shareholder. Held, sec. 83, I.R.C. 1954, is properly at issue.
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In connection with serving as an underwriter in a stock offering, P received cash and a warrant to purchase stock. P could not transfer or exercise the warrant until at least 13 months after the date of receipt, and there was no active trading of such warrants on any established market. P later sold the warrant to its sole shareholder. Held, sec. 83, I.R.C. 1954, is properly at issue. Held, further, under the provisions of sec. 1.83-7, Income Tax Regs., P must recognize ordinary income from the warrant upon P's sale of the warrant, not upon P's receipt. Held, further, no abuse of discretion…
1Opinion of the Court
WELLS, Judge:
Respondent determined a deficiency in petitioner’s Federal income tax for the year ending March 31, 1982, in the amount of $195,782.54. After concessions, the remaining issue is whether petitioner realized capital gain or ordinary income upon the sale by petitioner to its sole shareholder of a warrant to purchase stock in another corporation.
PRELIMINARY MATTER
When the instant case was reached for trial, .the parties had settled all but two of the items raised in the notice of deficiency. Trial then proceeded with respect to the issues involving those two items — the…
2Cases cited37 opinions
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