Alston v. Comm'r

T.C. Summary Opinion 2007-155

UNITED STATES TAX COURT

ROBERT A. AND KAREN L. ALSTON, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 9647-06S. Filed September 5, 2007.

Robert A. Alston, pro se.

Carol-Lynn E. Moran, for respondent.

RUWE, Judge: This case was heard pursuant to the provisions

of section 7463 of the Internal Revenue Code in effect when the

petition was filed.1 Pursuant to section 7463(b), the decision

1
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
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to be entered is not reviewable by any other court, and this

opinion shall not be treated as precedent for any other case.

Respondent determined a deficiency of $1,355.44 in

petitioners’ 2004 Federal income tax. After concessions by

petitioners,2 this Court must decide the extent of petitioners’

alternative minimum tax (AMT) liability.

Background

Petitioners filed a joint Federal income tax return for

2004, in which they reported $101,765 in estimated income tax

payments and $4,176.49 of income tax withheld. Petitioners

calculated that they were due a $6,141.73 refund. Upon receipt

of the return, respondent reduced petitioners’ claimed educator

expense deductions by $213 and assessed the resulting additional

tax of $67.80 as a mathematical error.3 Respondent also assessed

and imposed a section 6654(a) addition to tax of $878.08 for

failure to pay estimated income tax. As a result, respondent

reduced petitioners’ refund from $6,141.73 to $5,195.85, a

2
At trial, petitioners conceded that they are liable for
the alternative minimum tax (AMT), but they maintain that they
are liable for only $404, rather than the $1,352 determined by
respondent. Petitioners also concede a $9 mathematical error
that effectively reduces petitioners’ Schedule A, Itemized
Deductions.
3
Petitioners claimed a $713 educator expense deduction.
Sec. 62(a)(2)(D) limits educator expenses to $250 per eligible
educator, thus limiting petitioners’ eligibility for such a
deduction to $500. In accordance with sec. 6213(b)(1) and
(g)(2)(E)(i), respondent properly reduced as a mathematical error
the $213 excess claimed.
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difference of $945.88. On February 13, 2006, respondent issued

to petitioners a notice of deficiency in which he determined a

deficiency of $1,355.44, which included $1,352 in AMT.4

Discussion

As a general rule, the Commissioner’s determinations set

forth in a notice of deficiency are presumed correct, and the

taxpayer bears the burden of proving that these determinations

are in error. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115

(1933).5

Petitioners argue that they are liable for only $404 of AMT.

The difference between respondent’s and petitioners’ AMT

calculations is approximately equal to the reduction by

respondent in the amount of petitioners’ claimed refund.6

Petitioners contend that this reduction in their claimed refund

should be added to their regular tax as part of the calculation

of their AMT liability, arguing that they could not have received

4
The notice of deficiency also decreased itemized
deductions by $9.
5
Pursuant to sec. 7491(a), the burden of proof as to
factual issues may shift to the Commissioner where the taxpayer
introduces credible evidence and complies with substantiation
requirements, maintains records, and cooperates fully with
reasonable requests for witnesses, documents, and other
information. Petitioners have not met the requirements of sec.
7491(a).
6
The difference between the parties’ AMT calculations is
actually $948, not $945.88. We consider this difference to be de
minimis.
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an estimated tax “underpayment” penalty because they

substantially overpaid their total required estimated income tax.

Petitioners maintain that the reduction in their claimed refund

was the result of an increase in their regular tax paid (not an

estimated tax penalty or addition to tax), which should, in turn,

decrease their AMT liability.

As we have already discussed, the reduction in petitioners’

refund appears to be the result of an increase in their tax

liability of $67.80, on the basis of assessed mathematical errors

on petitioners’ return, and an assessed addition to tax of

$878.08 for failure to pay estimated income tax. On their

return, petitioners reported their tax liability as $80,557.95.

In the notice of deficiency, respondent listed petitioners’

assessed tax, before adding the AMT, as $80,632. Respondent also

used the $80,632 assessed regular tax in the calculation to

determine an AMT liability of $1,352. The AMT is a tax equal to

the excess of the “tentative minumum tax” for the taxable year

over the “regular tax” for the taxable year. Sec. 55(a).

Although the difference between the amount of regular tax

reported by petitioners and the amount of regular tax assessed by

respondent is slightly more than $67.80,7 we find that respondent

has incorporated the increase in regular tax resulting from

7
The difference is $74.05. We consider this slight
difference to be de minimis.
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mathematical errors into his calculation of petitioners’ AMT

liability. Therefore, we find that the inclusion of this

adjustment in the AMT calculation has already benefited

petitioners and cannot reduce respondent’s AMT calculation.

With respect to the remaining $878.08 in dispute, respondent

argues that it was due to an addition to tax for failure to pay

estimated income tax pursuant to section 6654, and should not be

part of the calculation of petitioners’ AMT liability.8 As we

mentioned, the AMT is a tax equal to the excess of the “tentative

minimum tax” for the taxable year over the “regular tax” for the

taxable year. Sec. 55(a). Generally, the term “regular tax

liability” means the tax imposed by chapter 1 of the Internal

Revenue Code for the taxable year. Sec. 26(b)(1). Section

6654(a) provides an addition to tax for failure to pay estimated

income taxes. Section 6654 lies in chapter 68 of the Internal

Revenue Code and thus is not part of a taxpayer’s regular tax

liability. Accordingly, if petitioners’ refund reduction is

8
Respondent argues that because the addition to tax was
based solely on petitioners’ return, and not as a part of the
notice of deficiency, this Court lacks jurisdiction over it. It
is true that we do not have jurisdiction to review respondent’s
assessment of an addition to tax for failure to pay estimated
income tax that is based on a filed return. See sec. 6665; see
also secs. 6211, 6212, and 6213; Meyer v. Commissioner, 97 T.C.
555, 560 (1991). However, our lack of jurisdiction to review the
addition to tax does not prohibit us from determining whether the
addition to tax should be included in the calculation of
petitioners’ AMT liability as determined in respondent’s notice
of deficiency. See sec. 6214(a).
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partially due to the section 6654(a) addition to tax, their

regular tax would not include that amount. Respondent has

established that he summarily assessed and imposed a section

6654(a) addition to tax of $878.08 on the basis of petitioners’

2004 filed return. Contrarily, petitioners have failed to show

that $878.08 of their refund reduction was due to anything other

than the addition to tax imposed by respondent.9

Accordingly, we find that respondent correctly omitted the

imposed section 6654(a) addition to tax when calculating

petitioners’ AMT liability. Therefore, we shall sustain

respondent’s determination. Contentions we have not addressed

are irrelevant, moot, or meritless.

To reflect the foregoing,

Decision will be entered

under Rule 155.

9
While we lack jurisdiction to review respondent’s
assessment of the sec. 6654(a) addition to tax, we note that
petitioners’ argument that their overpayment of total estimated
taxes could not generate an underpayment addition to tax is
flawed. Very simply, taxpayers required to make estimated tax
payments must pay four equal installments of their required
annual tax payments, based on their total required payment. See
sec. 6654(c). Although the total of petitioners’ installment
payments may have equaled more than their total required amount,
it is possible that one or more installments failed to meet the
required amount owed for that quarter, thus, leading to the
estimated tax addition to tax.