[Code of Federal Regulations]
[Title 26, Volume 2]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.83-4]

[Page 337-338]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.83-4  Special rules.

    (a) Holding period. Under section 83(f), the holding period of 
transferred property to which section 83(a) applies shall begin just 
after such property is substantially vested. However, if the person who 
has performed the services in

[[Page 338]]

connection with which property is transferred has made an election under 
section 83(b), the holding period of such property shall begin just 
after the date such property is transferred. If property to which 
section 83 and the regulations thereunder apply is transferred at arm's 
length, the holding period of such property in the hands of the 
transferee shall be determined in accordance with the rules provided in 
section 1223.
    (b) Basis. (1) Except as provided in paragraph (b)(2) of this 
section, if property to which section 83 and the regulations thereunder 
apply is acquired by any person (including a person who acquires such 
property in a subsequent transfer which is not at arm's length), while 
such property is still substantially nonvested, such person's basis for 
the property shall reflect any amount paid for such property and any 
amount includible in the gross income of the person who performed the 
services (including any amount so includible as a result of a 
disposition by the person who acquired such property.) Such basis shall 
also reflect any adjustments to basis provided under sections 1015 and 
1016.
    (2) If property to which Sec. 1.83-1 applies is transferred at 
arm's length, the basis of the property in the hands of the transferee 
shall be determined under section 1012 and the regulations thereunder.
    (c) Forgiveness of indebtedness treated as an amount paid. If an 
indebtedness that has been treated as an amount paid under Sec. 1.83-
1(a)(1)(ii) is subsequently cancelled, forgiven or satisfied for an 
amount less than the amount of such indebtedness, the amount that is 
not, in fact, paid shall be includible in the gross income of the 
service provider in the taxable year in which such cancellation, 
forgiveness or satisfaction occurs.

[T.D. 7554, 43 FR 31918, July 24, 1978]