From one of the Supreme Court cases cited above, CIR v. Smith, 324 U.S. 177:
Quote:
Mr. Chief Justice STONE delivered the opinion of the Court.
Respondent's employer gave to him, as compensation for his services, an option to purchase from the employer certain shares of stock of another corporation at a price not less than the then value of the stock. In two later tax years, when the market value of the stock was greater than the option price, respondent exercised the option, purchasing large amounts of the stock in each year. The question for decision is whether the difference between the market value and the option price of the stock was compensation for personal services of the employee, taxable as income in the years when he received the stock, under 22(a) of the Revenue Act of 1938, c. 289, 52 Stat. 447, and 22(a) of the Internal Revenue Code, 26 U. S.C. 22(a), 26 U.S.C.A. Int.Rev.Code, 22(a).
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Are you getting it yet? Mr. Smith was an EMPLOYEE. The question for decision was whether this option purchase of stock was taxable income.
The Supreme Court went on to say:
Quote:
Section 22(a) of the Revenue Act is broad enough to include in taxable income any economic or financial benefit conferred on the employee as compensation, whatever the form or mode by which it is effected.
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"Any economic or financial benefit conferred on the EMPLOYEE." The corporation is the employer. The human being, in this case Mr. Smith, is the employee. Got it?
The Supreme Court went on to decide that yes, in this instance, the stock option purchase was taxable income to Mr. Smith in the difference between the price he paid and the market price, which was higher.
Maybe you should read some of these cases at findlaw.com before you shoot yourself in the foot again.