Kimberlin v. Comm'r
United States Tax Court
X and Y entered into a private placement agreement, pursuant to which X would serve as the placement agent for the sale of Y's preferred stock. Y did not adhere to the agreement. A dispute ensued and was later settled. Pursuant to the settlement agreement, in 1995 Y issued to X warrants to purchase shares of Y preferred stock. In 1997, the warrants were exercised.
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X and Y entered into a private placement agreement, pursuant to which X would serve as the placement agent for the sale of Y's preferred stock. Y did not adhere to the agreement. A dispute ensued and was later settled. Pursuant to the settlement agreement, in 1995 Y issued to X warrants to purchase shares of Y preferred stock. In 1997, the warrants were exercised. R, in his notices of deficiency, determined that the warrants were transferred in connection with the performance of services, and the income from the warrants is taxable in 1997 pursuant to sec. 83, I.R.C.Held: R's determination is…
1Opinion of the Court
OPINION
Foley, Judge:
The issues for decision in these cases are whether: (1) Warrants issued to petitioners in accordance with a settlement and release agreement were transferred in connection with the performance of services and therefore constitute taxable income pursuant to section 83;2 (2) the warrants had a readily ascertainable fair market value in 1995, on the date of grant, or in 1997, the year of exercise; and (3) the payment to Kevin Kimberlin (i.e., the warrants transferred to him by Spencer Trask) is a constructive dividend, return of capital, or capital gain.
Background
Kevin…
2Cases cited8 opinions
- Parker v. CommissionerUnited States Tax Court · 1986
- Martin Ice Cream Co. v. Comm'rUnited States Tax Court · 1998
- Gulf Oil Corporation, in No. 89-2049 v. Commissioner of Internal Revenue. Commissioner of Internal Revenue, in No. 89-2050 v. Gulf Oil CorporationCourt of Appeals for the Third Circuit · 1990
- Gulf Oil Corp. v. CommissionerUnited States Tax Court · 1987
- Schulman v. CommissionerUnited States Tax Court · 1989
3 more not listed; retrieve them via the Exa API.
3Cited by7 opinions
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- Crescent Holdings, LLC v. Comm'rUnited States Tax Court · 2013
- Endeavor Partners Fund, LLC, Delta Currency Trading, LLC, Tax Matters Partner v. CommissionerUnited States Tax Court · 2018
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