Venture Funding v. Commissioner
United States Tax Court
P transferred stock to its employees as compensation for services, and it claimed a deduction in the year of transfer for the value of the stock. None of P's employees included the value of the transferred stock in his or her gross income for the year of transfer. HELD: Sec. 83(h), I.R.C., does not allow P to deduct the reported amount in the year of transfer.
1DissentRuwe, J.
The issue in this case is whether petitioner is to be denied a deduction for compensation paid in the form of property. The property was not subject to risk of forfeiture. The fair market value of the stock was includible1 in the employees’ income when the transfer occurred. The transfer meets the deductibility requirements of section 162. The only possible impediment to the deduction is section 83 and the regulations thereunder.2
The applicable statutory language is contained in subsections (a) and (h) of section 83. Subsection (a) provides that the value of transferred property:
shall be…
2Cases cited4 opinions
- United States v. American Trucking AssociationsSupreme Court of the United States · 1940
- Duncan Industries, Inc., etc. v. CommissionerUnited States Tax Court · 1979
- Nelson v. CommissionerUnited States Tax Court · 1998
- Schmidt Baking Co. v. CommissionerUnited States Tax Court · 1996