T.C. Memo. 1998-55
UNITED STATES TAX COURT
NORMAN EARL HOLLY, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 18414-96. Filed February 10, 1998.
Norman Earl Holly, pro se.
Wendy Wojewodzki, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
PANUTHOS, Chief Special Trial Judge: This case was heard
pursuant to the provisions of section 7443A(b)(3) and Rules 180,
181, and 182.1 Respondent determined a deficiency in
1
All section references are to the Internal Revenue Code
in effect for the year in issue, unless otherwise indicated. All
(continued...)
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petitioner's 1994 Federal income tax in the amount of $1,675 and
an accuracy-related penalty under section 6662(a) in the amount
of $335.
After concessions by respondent,2 the only issue for
decision is whether petitioner is subject to the alternative
minimum tax (AMT) for the taxable year 1994.3
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time of filing the
petition, petitioner resided at Silver Spring, Maryland.
Petitioner timely filed his Federal income tax return for
the taxable year 1994. On his return, petitioner reported
adjusted gross income in the amount of $49,379 and claimed
itemized deductions on Schedule A as follows:
Expense Amount
Real estate taxes $725
1
(...continued)
Rule references are to the tax Court Rules of Practice and
Procedure.
2
Respondent concedes that (1) petitioner is entitled to a
foreign tax credit in the amount of $239, and (2) petitioner is
not liable for the accuracy-related penalty under sec. 6662(a).
3
To the extent that petitioner seeks an abatement of
interest (or a review thereof), he must make such a request to
the Commissioner and await a final determination not to abate
interest. Sec. 6404(g); see also Bourekis v. Commissioner, 110
T.C. __, __ (1998) (slip op. at 9).
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Charitable contributions 885
Unreimbursed job-related
legal expenses 30,247
Moving expenses 1,145
Total 33,002
The taxable income reflected on line 37 of petitioner's return is
$13,927, and the total tax reflected on line 53 of the return,
after being reduced by a foreign tax credit, is $1,850. During
the taxable year 1994, petitioner was a retired Government
employee. On his return for the taxable year 1994, petitioner
indicated "Self-employed consultant" as his occupation.
Respondent does not dispute the correctness of any item of
income, deduction, or credit reflected on petitioner's return for
the taxable year 1994. Respondent, however, argues that
petitioner is subject to the AMT, and, accordingly, has
determined a deficiency in the amount of $1,675. Petitioner
argues that the AMT was created to apply only to higher income
taxpayers, and, accordingly, the AMT is not applicable in this
instance because he was not a high income taxpayer during the
taxable year in issue.
OPINION
Section 55(a) imposes an AMT on taxpayers to the extent that
their "tentative minimum tax", as calculated pursuant to section
55(b), exceeds the "regular tax", defined in section 55(c)(1) as
the regular tax liability for the taxable year reduced by the
foreign tax credit. Section 55(b)(1)(A) provides that for
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noncorporate taxpayers, the tentative minimum tax is 26 percent
of the first $175,000 of "taxable excess" (alternative minimum
taxable income (AMTI) less the exemption amount) and 28 percent
of any remaining taxable excess. AMTI is the taxable income of
the taxpayer for the taxable year, determined with the
adjustments provided in sections 56 and 58. Sec. 55(b)(2).
Section 56(b)(1) provides that, for purposes of calculating AMTI,
no deduction is allowed for miscellaneous itemized deductions and
State and local real property taxes paid, unless such taxes are
deductible in determining adjusted gross income. The exemption
amount for an unmarried taxpayer who is not a surviving spouse is
$33,750. Sec. 55(d)(1)(B).
We now turn to the question of whether respondent correctly
determined petitioner's AMT liability. To compute petitioner's
AMT liability, respondent started with the amount of income
reported by petitioner on his return before deducting the
personal exemption ($16,337).4 Respondent then added to this
amount the deductions claimed for: (1) Miscellaneous itemized
deductions ($30,247) and (2) real estate taxes ($725). As a
result, respondent determined petitioner's AMTI to be $47,309.
Since this amount exceeded the exemption amount for unmarried
taxpayers by $13,559, respondent calculated the tentative minimum
4
Because of a mathematical error, the amount which should
have been reflected on petitioner's return and respondent's
computation is $16,377.
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tax to be 26 percent of this excess, or $3,525. Since the amount
of regular tax reflected on petitioner's return was $1,850,
respondent determined that petitioner was liable for the AMT in
the amount of $1,675, the excess of the tentative minimum tax
over the regular tax reflected on petitioner's return.
As indicated, petitioner argues that, since the AMT was
intended to apply only to wealthier individuals, it should not
apply to him in this instance. Notwithstanding the mathematical
error explained supra note 4, we find no fault with respondent's
application of the AMT provisions or the method by which
respondent computed petitioner's AMT liability. The plain
meaning of the AMT provisions is that the amounts claimed by
petitioner on Schedule A of his return for legal expenses and
real estate taxes paid are not deductible for purposes of
calculating AMTI. Sec. 56(b)(1)(A). Although the results may
seem harsh to petitioner in this case, Congress created the AMT
by enacting the applicable statutory provisions, and we do not
have the authority to disregard a legislative mandate. Alexander
v. Commissioner, T.C. Memo. 1995-51, affd. 72 F.3d 938, 946-947
(1st Cir. 1995). Accordingly, we sustain respondent's
determination.
To reflect the foregoing,
Decision will be entered
under Rule 155.