7th Circ. Calls Railroad Stock Options Taxable In $13M Row

Law360, Washington (May 9, 2017, 2:58 PM EDT) -- A Seventh Circuit panel dealt another blow Monday to three Canadian National Railway Co. subsidiaries that have argued nonqualified stock options are not money or taxable compensation in a $13.3 million lawsuit against the IRS, though one of the judges dissented.

The majority of the panel ruled against Illinois Central Railroad Co., Wisconsin Central Ltd. and Grand Trunk Western Railroad Co., agreeing with the district court and IRS that a statutory exemption for qualified stock options and other compensation forms signaled that nonqualified options are not tax-exempt.

While Judge Daniel Anthony Manion said in his dissent that the plain language of the 1935...

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