Gross income includes “all income from whatever source derived” and one form in which income can be realized is through receipt of stock. I.R.C. § 61; Treas. Reg. § 1.61-1(a). Property transferred “in connection with the performance of services” is specifically required to be included in the gross income of the individual in the taxable year that the rights in the property have become “substantially vested.” The amount included in the income of the taxpayer is the fair market value of the property at the time that it becomes substantially vested less any amount that the individual paid for the property. I.R.C. § 83(a); Treas. Reg. § 1.83-1(a).
Property is considered to be substantially vested under section 83 when it is transferable or not subject to a substantial risk of forfeiture, whichever occurs earlier. I.R.C. § 83(a); Treas. Reg. § 1.83-3(b). Transferability means that the individual can transfer (i.e. sell, assign, or pledge) any interest in the property to a person other than original transferor and the one re...
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