T.C. Summary Opinion 2001-77
UNITED STATES TAX COURT
EDWARD A. BIRTS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 3914-00S. Filed June 4, 2001.
Edward A. Birts, pro se.
Marilyn S. Ames, for respondent.
ARMEN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect at the time the petition was filed.1 The decision to be
entered is not reviewable by any other court, and this opinion
should not be cited as authority.
1
Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code in effect for 1997,
the taxable year in issue.
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Respondent determined a deficiency in petitioner’s Federal
income tax for the taxable year 1997 in the amount of $2,982.
The deficiency is attributable solely to the alternative minimum
tax prescribed by section 55.
The issue for decision is whether petitioner is liable for
alternative minimum tax. We hold that he is.
Background
Some of the facts have been stipulated, and they are so
found. Petitioner resided in Houston, Texas, at the time that
his petition was filed with the Court.
Petitioner filed a Federal income tax return, Form 1040, for
1997. On his return, petitioner listed his filing status as
married filing separately, and he claimed deductions for two
personal exemptions. Petitioner reported adjusted gross income
(AGI) in the amount of $37,850, consisting solely of wages from
employment.
In addition, petitioner itemized deductions on Schedule A.
In this regard, petitioner claimed total deductions in the amount
of $28,403, consisting of charitable contributions in the amount
of $1,500 and miscellaneous itemized deductions (in the form of
unreimbursed employee expenses) in the net amount of $26,903,
calculated as follows:
Miscellaneous itemized deductions
(Unreimbursed employee expenses) $27,660
Less: 2% AGI -757
Net amount 26,903
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After taking into account itemized deductions and personal
exemptions, petitioner reported taxable income in the amount of
$4,147. Using the tax table prescribed by section 3 for
individuals, petitioner reported tax in the amount of $619.
Petitioner did not attach Form 6251, Alternative Minimum
Tax–Individuals, to his 1997 return, nor did petitioner report
any liability for alternative minimum tax on his return.
In October 1999, respondent issued a notice of deficiency to
petitioner for the taxable year 1997. In the notice, respondent
did not disallow any of the itemized deductions or personal
exemptions claimed by petitioner on his return. Rather,
respondent determined that petitioner is liable for alternative
minimum tax, as prescribed by section 55, in the amount of
$2,982.
Petitioner filed a petition contesting respondent’s
deficiency determination. In the petition (as well as at trial),
petitioner contends that he is not the type of person who should
be liable for alternative minimum tax.
Discussion
Deferring for the moment the fundamental issue whether
petitioner is liable for alternative minimum tax, the following
computation shows the proper amount of such tax:
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I. Individual Income Tax Return - Form 1040
Adjusted Gross Income
(Form 1040, lines 32/33 $37,850
Less: Itemized Deductions
(Schedule A) -28,403
Balance (Form 1040, Line 36) 9,447
Less: Exemptions
(Form 1040, Line 37) -5,300
Taxable Income
(Form 1040, Line 38) 4,147
Tax (secs. 1(d), 3(c)) 619
Regular Tax (secs. 26(b)(1), (2)(A), 55(c)(1)) 619
II. Itemized Expenses - Schedule A
Charitable Contributions $1,500
Miscellaneous itemized deductions
(Unreimbursed employee expenses) +26,903
Total Itemized Deductions 28,403
III. Alternative Minimum Taxable Income
Taxable Income (Form 1040, line 38) $ 4,147
Adjustments
Miscellaneous itemized deductions
(Unreimbursed employee expenses) +26,903
Exemptions +5,300
Balance 36,350
Plus: Items of Tax Preference -0-
Alternative Minimum Taxable Income 36,350
IV. Alternative Minimum Tax
Alternative Minimum Taxable Income $36,350
Less: Exemption Amount -22,500
Taxable Excess 13,850
Times: applicable AMT rate x 26%
Tentative Minimum Tax 3,601
Less: Regular Tax -619
Alternative Minimum Tax 2,982
Our analysis necessarily begins with section 55, the section
of the Internal Revenue Code that imposes the alternative minimum
tax. Initially, we note that the alternative minimum tax is
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imposed in addition to the “regular tax” and that the regular tax
is, as relevant herein, the income tax computed on taxable income
by reference to the pertinent tax table. Sec. 55(a), (c)(1); see
also sec. 26(b)(1), (2)(A). In petitioner’s case, the regular
tax is $619.
Pursuant to section 55(a), the alternative minimum tax is
the difference between the “tentative minimum tax” and the
regular tax. In the case of a married individual who files a
separate return, and as relevant herein, the tentative minimum
tax is 26 percent of the excess of a taxpayer's “alternative
minimum taxable income” over an exemption amount of $22,500.2
See sec. 55(b)(1)(A), (b)(2), (d)(1)(C)(i).
Section 55(b)(2) defines the term “alternative minimum
taxable income”. As relevant herein, the term “alternative
minimum taxable income” means the taxpayer's taxable income for
the taxable year determined with the adjustments provided in
section 56 and increased by the amount of items of tax preference
2
In the case of a married individual who files a joint
return with his or her spouse, the exemption amount is $45,000.
See sec. 55(d)(1)(A)(i). It is possible, therefore, that
petitioner might not have been liable for alternative minimum tax
if he had filed a joint return with his spouse. However, sec.
6013(b)(2)(B) precludes the filing of a joint return after a
taxpayer files a separate return if the taxpayer files a timely
petition with this Court in respect of a notice of deficiency for
the year for which the notice is issued. Notwithstanding this
limitation, respondent offered to settle the present case on a
“deemed filed” basis; however, petitioner and/or petitioner’s
spouse declined the offer.
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described in section 57. Petitioner had no items of tax
preference in 1997. Accordingly, alternative minimum taxable
income means petitioner’s taxable income determined with the
adjustments provided in section 56.
Petitioner’s taxable income for 1997 was $4,147, the amount
reported on line 38 of Form 1040.
As relevant herein, the adjustments provided in section
56(b) are twofold. First, section 56(b)(1)(A)(i) states that no
deduction shall be allowed for any miscellaneous itemized
deduction as defined in section 67(b), such as unreimbursed
employee expenses, in computing alternative minimum taxable
income. Second, section 56(b)(1)(E) states that no personal
exemptions shall be allowed in computing alternative minimum
taxable income.
The effect of section 56(b)(1)(A)(i) and (b)(1)(E) is to
increase petitioner’s taxable income by: (1) $26,903, the amount
claimed on petitioner’s Schedule A for miscellaneous itemized
deductions (i.e., unreimbursed employee expenses); and (2)
$5,300, the amount claimed on petitioner’s Form 1040 for personal
exemptions.
After taking into account the foregoing two adjustments,
petitioner’s alternative minimum taxable income for 1997 equals
$36,350. Alternative minimum taxable income exceeds the
applicable exemption amount of $22,500 by $13,850. See sec.
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55(d)(1)(C)(i). Petitioner’s “tentative minimum tax” is
therefore 26 percent of the excess, or $3,601. Sec.
55(b)(1)(A)(i)(I), (iii). Because petitioner’s tentative minimum
tax exceeds the regular tax of $619, petitioner is liable for the
alternative minimum tax in the amount of such excess; i.e.,
$3,601 less $619, or $2,982. See sec. 55(a).
Petitioner does not challenge the mechanics of the foregoing
computation. Rather, petitioner contends that the alternative
minimum tax was not meant to apply to him because he is not
wealthy and had no items of tax preference.
The clearest expression of legislative intent is found in
the actual language used by Congress in enacting legislation. As
the Supreme Court has stated: “There is * * * no more persuasive
evidence of the purpose of a statute than the words by which the
legislature undertook to give expression to its wishes.” United
States v. American Trucking Associations, Inc., 310 U.S. 534, 543
(1940); see Rath v. Commissioner, 101 T.C. 196, 200 (1993)
(controlling effect will generally be given to the plain language
of a statute, unless to do so would produce absurd or futile
results). Again as the Supreme Court has stated:
in the absence of a clearly expressed legislative
intention to the contrary, the language of the statute
itself must ordinarily be regarded as conclusive.
Unless exceptional circumstances dictate otherwise,
when we find the terms of a statute unambiguous,
judicial inquiry is complete. [Burlington N. R.R. Co.
v. Oklahoma Tax Commn., 481 U.S. 454, 461 (1987);
citations and internal quotation marks omitted.]
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“The statutory scheme governing the imposition and
computation of the alternative minimum tax is clear and precise,
and leaves, on these facts, no room for interpretation.” Okin v.
Commissioner, T.C. Memo. 1985-199, affd. per curiam 808 F.2d 1338
(9th Cir. 1987). Thus, there is no justification, in the instant
case, to ignore the plain language of the statute, particularly
where, as here, “we have a complex set of statutory provisions
marked by a high degree of specificity.” Huntsberry v.
Commissioner, 83 T.C. 742, 748 (1984).
The alternative minimum tax serves to impose a tax whenever
the sum of specified percentages of the excess of alternative
minimum taxable income over the applicable exemption amount
exceeds the regular tax for the taxable year. See sec. 55(a),
(b)(1)(A), (c), (d)(1); cf. Huntsberry v. Commissioner, supra at
744. “Alternative minimum taxable income” essentially means the
taxpayer's taxable income for the taxable year determined with
the adjustments provided in section 56 and increased by the
amount of items of tax preference described in section 57.
In Huntsberry v. Commissioner, supra, we held that tax
preferences are a significant, but not necessarily an
indispensable, component of alternative minimum taxable income.
Accordingly, the taxpayers in that case were held liable for the
alternative minimum tax computed in accordance with the specific
provisions of section 55, notwithstanding the fact that the
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taxpayers did not have any items of tax preference for the
taxable year in issue. See Klaassen v. Commissioner, T.C. Memo.
1998-241, affd. without published opinion 182 F.3d 932 (10th Cir.
1999). The same result applies in the present case.
If Congress had intended to tax only tax preferences, it
would have defined “alternative minimum taxable income”
differently, for example, solely by reference to items of tax
preference. Instead, Congress provided for a tax measured by a
broader base, namely, alternative minimum taxable income, in
which tax preferences are merely included as potential
components.
Absent some constitutional defect, we are constrained to
apply the law as written, see Estate of Cowser v. Commissioner,
736 F.2d 1168, 1171-1174 (7th Cir. 1984), affg. 80 T.C. 783, 787-
788 (1983), and we may not rewrite the law because we may “deem
its effects susceptible of improvement”, Commissioner v. Lundy,
516 U.S. 235, 252 (1996) (quoting Badaracco v. Commissioner, 464
U.S. 386, 398 (1984)). Accordingly, petitioner’s appeal for
relief must, in this instance, be addressed to his elected
representatives. “The proper place for a consideration of
petitioner’s complaint is the halls of Congress, not here.” Hays
Corp. v. Commissioner, 40 T.C. 436, 443 (1963), affd. 331 F.2d
422 (7th Cir. 1964).
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In view of the foregoing, we hold that petitioner is liable
for the alternative minimum tax.
Reviewed and adopted as the report of the Small Tax Case
Division.
In order to reflect the foregoing,
Decision will be entered
for respondent.