Pagel, Inc. v. Commissioner of Internal Revenue
United States Court of Appeals for the Eighth Circuit
905 F.2d 1190 (1990)
- Written by Tammy Boggs, JD
Facts
In 1977, Pagel, Inc. (plaintiff) received a nonqualified stock option as partial compensation for services provided to Immuno Nuclear Corp. (Immuno). The stock option provided the right to buy Immuno’s stock at scheduled prices. Immuno’s stock was not publicly traded, and at the time of the grant, Pagel was restricted from exercising or disposing of the option for 13 months. In 1981, Pagel sold the Immuno option and reported the sale to the Internal Revenue Service (IRS) (defendant) as a capital gain. The IRS disallowed capital-gain treatment and determined that the sale of the Immuno option was taxable as ordinary income in the year it was sold. Pagel challenged the IRS determination, and the tax court agreed with the IRS. Pagel appealed.
Rule of Law
Issue
Holding and Reasoning (Fagg, J.)
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