The IRS recently proposed regulations (REG-141075-09) under
Section 83 to clarify and make changes to the current
regulations.
Section 83 provides rules regarding the recognition of income
when property (e.g., stock) is transferred to a service provider in
connection with the performance of services. In general, the
service provider recognizes income in the first taxable year that
the property has been transferred to the service provider, and the
property is either transferrable or not subject to a substantial
risk of forfeiture (i.e., the property is vested).
The current regulations provide that a substantial risk of
forfeiture exists where rights in property that are transferred are
conditioned, directly or indirectly, upon the future performance
(or refraining from performance) of substantial services by any
person, or the occurrence of a condition related to a purpose of
the transfer, and the possibility of forfeiture is substantial if
the condition is not
