Comm’r, 2014 TCM 227 (2014)
Brinkley v. Comm’r, 2014 TCM 227, 15 F.5d 60144 (Fed. Cir. 2015) aff’g Brinkley v. Comm’r, 2014 TCM 227 (2014)
The $1 million was not paid entirely in exchange for Dr. Frederick’s shares. This is supported by the fact that Dr. Frederick not only signed away his shares, but also signed away his right(s) to certain intellectual property and agreed to work for the acquiring company. Since not all of the $1 million was given in exchange for the shares, the rest can and shall be treated as deferred …show more content…
Comm’r are very similar to those in this case. In 2011 Google (acquirer) and Zave Networks (target) agreed to a merger that required a minority shareholder to “turn over all his intellectual property related to Zave and become a Google employee.” “Schedules of the merger agreement…identified him (the employee) as a deferred compensation recipient.” The petitioner (Brinkley) believed that all of his compensation should be treated as a capital gain and not deferred compensation because “the income he received as a result of the merger represented funds derived wholly from the sale of his stock and qualifies for long-term capital gain tax treatment.” In Brinkley the court held that “We cannot presume that in an agreement to pay petitioner for completing two requirements (turning over all his intellectual property related to Zave and becoming a Google employee) Zave actually intended for the entire amount to be paid with respect to only one of those requirements (signing over shares)…The preponderance of the evidence…is that petitioner received the value of his stock and compensation for service previously rendered or to be rendered in the future. Accordingly, respondent’s determination on this issue is sustained.” This decision was later affirmed in Brinkley v. Comm’r, 2014 TCM 227, 15 F.5d 60144 (Fed. Cir. 2015). Given the similarities between this case and Brinkley v. Comm’r (treating certain payments as deferred compensation as it relates to