Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 69-75

1969-1 C.B. 52

Sec. 162

Sec. 1032

IRS Headnote

The fair market value of authorized but unissued stock distributed by a corporation to its employees as compensation is deductible under section 162(a) of the Code.

Full Text

Rev. Rul. 69-75

A corporation distributed shares of its previously authorized but unissued stock to its employees as compensation for services rendered. The fair market value of the stock on the date of the distribution together with other compensation paid to the employees represented reasonable compensation for personal services rendered.

Held, under section 1032(a) of the Internal Revenue Code of 1954, no gain or loss is recognized to the corporation by reason of the distribution of the stock. The fair market value of the stock on the date of the distribution is deductible by the corporation as a business expense under section 162(a) of the Code. See Revenue Ruling 62-217, C.B. 1962-2, 59, which holds similarly with respect to treasury stock distributed by a corporation to its employees.