Commissioner of Internal Revenue v. Mayer

EVANS, Circuit Judge.

The Internal Revenue Commissioner determined that respondent was liable for a deficiency income tax for the year 1929 based upon the fair market value of rights (warrants) issued to him in 1929 as a stockholder of corporation A. The warrants gave him the right to subscribe for stock in corporations B and C, which stock was owned by A, at prices below the existing market price. Respondent exercised his rights in 1929. The stock thus acquired by him in 1929 was not sold in that year. Was the difference between market and warrant price of stock tax-, able as income to…