T.C. Summary Opinion 2006-67
UNITED STATES TAX COURT
GREGORY C. AND KRISTINE J. SCHICK, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2078-05S. Filed April 26, 2006.
Gregory C. Schick, pro se.
Margaret Martin, for respondent.
PANUTHOS, Chief 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. The
decision to be entered is not reviewable by any other court, and
this opinion should not be cited as authority. Unless otherwise
indicated, subsequent section references are to the Internal
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Revenue Code in effect for the year in issue, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
Respondent determined that petitioners are liable for a
deficiency in Federal income tax of $7,364 for the 2003 taxable
year. The issue for decision is whether, in the context of
respondent’s motion for summary judgment, petitioners are liable
for the alternative minimum tax (sometimes referred to as AMT)
for the 2003 taxable year.
Background
At the time the petition was filed petitioners resided in
Concord, California.
Petitioners timely filed a Form 1040, U.S. Individual Income
Tax Return, for the 2003 taxable year (2003 income tax return).
Petitioners reported wages of $323,498. Petitioners claimed
personal exemptions for themselves. Some of petitioners’ claimed
itemized deductions on Schedule A were as follows:
State and local income taxes $39,189
Real estate taxes 4,935
Personal property taxes 230
On line 40 of Form 1040, petitioners reported taxable income of
$270,521, and on line 41 of Form 1040, petitioners reported a tax
of $70,717. Petitioners did not report an AMT on their 2003
income tax return.
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In the notice of deficiency, respondent determined that
petitioners were liable for an AMT of $7,364 for the 2003 taxable
year.
Discussion
Summary judgment is intended to expedite litigation and
avoid unnecessary and expensive trials. Fla. Peach Corp. v.
Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be
granted with respect to all or any part of the legal issues in
controversy “if the pleadings, answers to interrogatories,
depositions, admissions, and any other acceptable materials,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and a decision may be
rendered as a matter of law.” Rule 121(b); Sundstrand Corp. v.
Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th
Cir. 1994); Naftel v. Commissioner, 85 T.C. 527, 529 (1985).
The Commissioner’s determination is presumed correct, and
generally, a taxpayer bears the burden of proving otherwise.
Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).1
Section 55 imposes, in addition to all other taxes imposed
by subtitle A, an AMT on noncorporate taxpayers. The
determination of a noncorporate taxpayer’s AMT requires a
1
The burden as to a factual issue relevant to the
liability for tax may shift to the Commissioner if certain
requirements are fulfilled. Sec. 7491(a). In the present case
there is no dispute of fact. Since we decide this case on the
legal issue, any issue as to the burden of proof is not relevant.
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recomputation of taxable income, leading to a new tax base or an
alternative minimum taxable income. Sec. 55(b)(2). In making
the recomputation, and as relevant herein, certain (but not all)
itemized deductions are not allowed, nor is the personal
exemption. In particular, section 56(b)(1)(A)(ii) states that no
itemized deduction for State and local taxes shall be allowed in
computing alternative minimum taxable income. Further, section
56(b)(1)(E) states that no personal exemptions shall be allowed
in computing alternative minimum taxable income. Finally,
section 56(b)(1)(F) states that section 68 (overall limitation on
itemized deductions) does not apply, therefore decreasing taxable
income by the amount of the section 68 reduction to itemized
deductions.
Petitioners do not dispute the computation of the AMT as
determined by respondent. Petitioners nevertheless contend that
the AMT is confusing and complex, and they are unclear as to why
they are liable for the AMT, which effectively deprives them of
the benefit of some itemized deductions. Petitioners also make
reference to recent proposals by Congress to repeal or modify the
AMT and criticism of the AMT by the National Taxpayer Advocate.
Congress established the alternative minimum taxable income
as a broad base of income in order to tax taxpayers more closely
on their economic income, intending for all taxpayers to pay
their fair share of the overall Federal income tax burden. Allen
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v. Commissioner, 118 T.C. 1, 5 (2002). 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. Sec. 55; Huntsberry v. Commissioner, 83 T.C.
742, 747-748 (1984). In Huntsberry, we held that tax preferences
are a significant, but not necessarily an indispensable
component, of alternative minimum taxable income. Thus, the
taxpayers in that case were subject to the AMT although they did
not have any tax preference items. See also Klaassen v.
Commissioner, T.C. Memo. 1998-241, affd. without published
opinion 182 F.3d 932 (10th Cir. 1999).
We are not unsympathetic to petitioners’ position. There
have been proposals of some in Congress to change the law, and
further there have been well-intended criticisms by some relating
to the unintended effects of the provisions of the AMT. In
Speltz v. Commissioner, 124 T.C. 165, 176 (2005), we stated:
The unfortunate consequences of the AMT in various
circumstances have been litigated since shortly after
the adoption of the AMT. In many different contexts,
literal application of the AMT has led to a perceived
hardship, but challenges based on equity have been
uniformly rejected. [Citations omitted.]
However unfair this statute might seem to petitioners, the
Court must apply the law as written. As this Court noted in Hays
Corp. v. Commissioner, 40 T.C. 436, 443 (1963), affd. 331 F.2d
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422 (7th Cir. 1964): “The proper place for a consideration of
petitioner’s complaint is the halls of Congress, not here.”
Based on the foregoing, we are satisfied that respondent is
entitled to a judgment in his favor as a matter of law, and
respondent’s motion for summary judgment will be granted.
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing,
An appropriate order granting
respondent’s motion and decision for
respondent will be entered.