Hartman v. United States

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As a partner of E&Y, Hartman received restricted shares in Cap Gemini as part of a 2000 sale. The agreement provided for an initial sale of 25 percent of the shares to satisfy each partner’s tax liability as a result of the transaction. In 2001 Hartman received a Form 1099-B reflecting that he was deemed to have received $8,262,183, valuing his unsold Cap shares at $148 per share. Hartman’s return for 2000, reported the entire amount as capital gains income. After closing, the value of Cap shares dropped to $56 per share. Hartman voluntarily terminated his employment, forfeiting 10,560 shares of stock. He received a credit for taxes paid on those shares under I.R.C. 1341. In 2003, Hartman filed an amended return for 2000, claiming that he had received only the 25 percent of Cap shares that had been monetized in 2000, with the remainder received in 2001 and 2002. He sought a refund of $1,298,134. The IRS failed to act on the claim. The Claims Court found that Hartman had constructively received all 55,000 shares in 2000 and was not entitled to a tax refund. The Federal Circuit affirmed. View "Hartman v. United States" on Justia Law