Montgomery v. Comm'r
United States Tax Court
P-H, president and CEO of MGC Communications, Inc. (MGC), received incentive stock options (ISOs) from MGC between April 1996 and March 1999. In November 1999, P-H resigned as president and CEO of MGC and entered into an employment contract with MGC which included provisions accelerating the vesting dates of his ISOs. In early 2000, P-H exercised many of his ISOs.
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P-H, president and CEO of MGC Communications, Inc. (MGC), received incentive stock options (ISOs) from MGC between April 1996 and March 1999. In November 1999, P-H resigned as president and CEO of MGC and entered into an employment contract with MGC which included provisions accelerating the vesting dates of his ISOs. In early 2000, P-H exercised many of his ISOs. P-H subsequently sold shares of MGC stock in 2000 and 2001 at prices above and below the exercise prices that he paid for the shares. Ps filed a joint Federal income tax return for 2000 reporting total tax of $ 2,831,360, including…
1Opinion of the Court
HAINES, Judge:
Respondent determined a deficiency of $417,601 in petitioners’ Federal income tax for 2000 and an accuracy-related penalty of $83,520 under section 6662(b).1 All references to petitioner in the singular are to petitioner Nield Montgomery.
After concessions,2 the issues remaining for decision are:(1) Whether petitioner’s rights in shares of stock acquired upon the exercise of incentive stock options (ISOs) in 2000 were subject to a substantial risk of forfeiture within the meaning of section 83(c)(3) and section 16(b) of the Securities Exchange Act of 1934)3 (the Exchange Act). We…
2Cases cited14 opinions
- HIGBEE v. COMMISSIONER OF INTERNAL REVENUEUnited States Tax Court · 2001
- United States v. BoyleSupreme Court of the United States · 1985
- Fed. Sec. L. Rep. P 90,216 Magma Power Company v. The Dow Chemical CompanyCourt of Appeals for the Second Circuit · 1998
- Allen v. Comm'rUnited States Tax Court · 2002
- Fed. Sec. L. Rep. P 90,280 Margaret Gwozdzinsky, Derivatively on Behalf of Revco D.S., Inc. v. Zell/chilmark Fund, L.P. And Revco D.S., Inc.Court of Appeals for the Second Circuit · 1998
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- Strom v. United StatesCourt of Appeals for the Ninth Circuit · 2011
- Palahnuk v. Comm'rUnited States Tax Court · 2006
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