Supreme Court of the United States
Commissioner of Internal Revenue v. Lobue
May 28, 1956351 U.S. 243
Summary
The Court held that the stock options granted to LoBue were taxable compensation under §22(a) and that the taxable gain is measured at the time the options are exercised, not when granted. The judgment of the lower courts was reversed and the case remanded for further proceedings on the timing issue.
Holding
- Whether the transfer of stock options at below market value constitutes taxable compensation under §22(a) of the Internal Revenue Code of 1939.. The options are compensation for personal services and therefore taxable under §22(a).
- When the taxable gain from such stock options should be measured – at grant, at exercise, or at another point.. The taxable gain is measured at the time the options are exercised, not when granted.
Docket 373
Cited authorities
- 53 Stat. 9
- 53 Stat. 574
- 64 Stat. 942
- 56 Yale L.J. 706
- 64 Yale L.J. 269
- 64 Stat. 942
- 56 Yale L.J. 706
- 62 Yale L.J. 832
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