T.C. Summary Opinion 2007-104
UNITED STATES TAX COURT
KEVIN CLARE AND SARAH LOUISE MOORE, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 18169-04S. Filed June 21, 2007.
Kevin Clare and Sarah Louise Moore, pro sese.
Michael L. Boman, for respondent.
GOLDBERG, 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. Pursuant to section
7463(b), the decision to be entered is not reviewable by any
other court, and this opinion shall not be treated as precedent
for any other case. Unless otherwise indicated, subsequent
section references are to the Internal Revenue Code in effect for
the year in issue.
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Respondent determined a deficiency in petitioner’s Federal
income tax of $6,969 for the taxable year 2002. The issues for
decision are whether petitioners are subject to the alternative
minimum tax provided by section 55 and interest on the liability
at issue.
Background
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 the petition
was filed, petitioners resided in Columbia, Missouri.
Petitioners reported adjusted gross income of $405,807,
including a long-term capital gain of $342,263, on their 2002
Federal Income Tax return. They computed tax on the capital gain
at the maximum capital gains tax rate for 2002, 20 percent. They
did not, however, compute or report alternative minimum tax.
Respondent sent petitioners a notice of deficiency in which
respondent determined that petitioners were subject to
alternative minimum tax on the long-term capital gain resulting
in a deficiency in the amount of $6,969.
After receiving the notice of deficiency, petitioners
contacted the Internal Revenue Service’s (IRS) local office,
where they reviewed the figures on their 2002 return with an
agent. It was during this phone call that petitioners believed
that there was a discrepancy between the figures in the IRS’s
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records and their return. The representative, who was reading
the figures from records kept in the IRS’s computer database,
explained that she did not have petitioners’ actual return in
that office, and that the reason for the discrepancy was due to
proposed adjustments made by the Commissioner to petitioners’
return. Petitioners replied that they had not previously
received notice of those adjustments, and that the notice of
deficiency was their first indication of a potential change in
their 2002 income tax.
Discussion
Petitioners’ challenge to the proposed deficiency is two-
fold. First, petitioners testified at trial that the alternative
minimum tax should not apply to them because “[lines 1 and 91 of
Form 6251, Alternative Minimum Tax Computation] should be zero”
and not, $397,775, the amount petitioners believe that the IRS
arrived at. Petitioners contend that this discrepancy is just
one example in a string of unexplained discrepancies since their
receipt of the notice of deficiency, and a symptomatic example of
why respondent’s computation should not be afforded credence by
this Court. Second, petitioners maintain that the alternative
minimum tax, as applied to them, is inherently unfair because
1
We believe that petitioners meant to say line 39 on Form
1040.
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Congress never intended the tax to apply to taxpayers “in [their]
situation.”
Petitioners could not point out, with specificity, any other
discrepancies in figures between themselves and respondent other
than their repeated references to the aforementioned telephone
conversation that they had with respondent’s agent. Moreover,
petitioners admitted under cross-examination that they did, in
fact, agree to the alternative minimum tax reported on the
computation that respondent’s Appeals Office calculated for them,
and that was stipulated and received into evidence in this case
as Exhibit 3-R.
Finally, petitioner husband concluded his testimony at trial
with the following: “I was willing, after seeing their
computations, I was willing to admit that I probably did owe
alternative minimum tax even though the IRS didn’t do a good job
in proving that to me. I proved it to myself essentially.”
Based on petitioners’ admission, and our review of
respondent’s computation, we hold that petitioners are subject to
the alternative minimum tax provided under section 55.
As to petitioners’ argument that this Court should relieve
them of their tax obligations because “it would be unfair to
apply the alternative minimum tax to people like [them],” we
begin by addressing the event which triggered application of the
alternative minimum tax; in this case, the sale of petitioners’
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farm property. Since petitioners apparently did not purchase
another residence within 12 months, they were required to report
and accordingly, pay tax on, the proceeds from the sale as long
term capital gain. While we sympathize with the fact that
petitioners are middle-income taxpayers who, without the proceeds
of sale, would not otherwise be subject to the alternative
minimum tax, we cannot change the facts, nor the statute, to
provide them with equitable relief. The triggering event in this
case was a one-time sale, making petitioners subject to the
alternative minimum tax. It is simply beyond the purview of this
Court to decide otherwise.
We also remind petitioners that this Court has consistently
and repeatedly rejected challenges to proposed deficiencies based
on the fairness of the alternative minimum tax. Kenseth v.
Commissioner, 259 F.3d 881 (7th Cir. 2001), affg. 114 T.C. 399
(2000); Merlo v. Commissioner, 126 T.C. 205 (2006); see also
Alexander v. IRS, 72 F.3d 938 (1st Cir. 1995), affg. T.C. Memo.
1995-51; Okin v. Commissioner, 808 F.2d 1338 (9th Cir. 1987),
affg. T.C. Memo. 1985-199; Warfield v. Commissioner, 84 T.C. 179
(1985); Huntsberry v. Commissioner, 83 T.C. 742 (1984).
Accordingly, we sustain respondent’s proposed deficiency.
Finally, as to the issue of interest, petitioner did not
either formally request an abatement of the interest on the
liability at issue as required under section 6404(e), nor did he
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argue that the interest on the liability was the result of error
or delay on the part of an employee of the Internal Revenue
Service. Sec. 6404(e). Therefore, we have no jurisdiction over
this matter.
Decision will be entered
for respondent.