Lo Bue v. Commissioner
United States Tax Court
In 1945, 1946, and 1947, petitioner was granted options to purchase his employer's stock. When petitioner received the stock in 1946 and 1947, its fair market value exceeded the option price. The options were granted to give petitioner a proprietary interest in the corporation, and not as additional compensation. Held, petitioner received no taxable compensation in 1946 and 1947 upon receipt of the stock.
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In 1945, 1946, and 1947, petitioner was granted options to purchase his employer's stock. When petitioner received the stock in 1946 and 1947, its fair market value exceeded the option price. The options were granted to give petitioner a proprietary interest in the corporation, and not as additional compensation. Held, petitioner received no taxable compensation in 1946 and 1947 upon receipt of the stock. T. D. 5507, 1946-1 C. B. 18, and I. T. 3795, 1946-1 C. B. 15, to the contrary, are not justified by Commissioner v. Smith, 324 U.S. 177 (1945).
1Opinion of the Court
OPINION.
Nice, Judge:
Petitioner argues that the stock options given to him in 1945, 1946, and 1947 were granted by the corporation for the purpose of providing him with a proprietary .interest in the business, and were not intended as additional compensation to be received when he exercised them.
If the options were intended as additional compensation, the excess of the fair market value over the option price is taxable income to him when the option is exercised. Commissioner v. Smith, 324 U. S. 177 (1945). If the options were granted to provide him with a proprietary interest in the business,…
2Cases cited7 opinions
- Commissioner v. SmithSupreme Court of the United States · 1945
- Choate v. CommissionerSupreme Court of the United States · 1945
- Stone v. ComissionerUnited States Tax Court · 1953
- Commissioner of Internal Revenue v. Stone's EstateCourt of Appeals for the Third Circuit · 1954
- McNamara v. Commissioner of Internal RevenueCourt of Appeals for the Seventh Circuit · 1954
2 more not listed; retrieve them via the Exa API.
3Cited by13 opinions
- Commissioner v. LoBueSupreme Court of the United States · 1956
- Babbitt v. CommissionerUnited States Tax Court · 1955
- Union Chemical & Materials Corp. v. United StatesUnited States Court of Claims · 1961
- Commissioner of Internal Revenue v. Philip J. Lo BueCourt of Appeals for the Third Circuit · 1955
- LoBue v. CommissionerUnited States Tax Court · 1957
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