United States v. Tuff, 469 F.3d 1249 (9th Cir. 2006)

James H. Tuff received non-qualified stock options as an employee of RealNetworks, which he twice exercised in 1999 to purchase shares in the company that were worth more than $460,000. Tuff contended that he realized income only when the shares were later liquidated by Morgan Stanley (and were worth substantially less) rather than when he exercised the options. The Ninth Circuit held that Tuff realized the income when he exercised the options and not when they were liquidated.