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deduction for legal fees is a miscellaneous itemized deduction
subject to section 67(a)).
Had Congress intended to except legal fees attributable to
taxable punitive damages from the 2-percent limitation of section
67(a), it easily could have done so. It did not, and we must
interpret the statute as it is written. See United States v. Ron
Pair Enters., Inc., 489 U.S. 235, 241 (1989); see also Estate of
Young v. Commissioner, 81 T.C. 879, 890 (1983) (Chabot, J.,
concurring), where it is observed that "our task is to interpret
the statute that the Congress enacted and not to guess at what
the Congress would have done had it faced the matter we deal with
in the instant case".
We hold that legal expenses incurred in connection with the
receipt of punitive damages constitute miscellaneous itemized
deductions within the meaning of section 67(b). Having so held,
we must also decide whether miscellaneous itemized deductions for
legal expenses related to receipt of punitive damages are subject
to disallowance pursuant to section 56(b)(1)(A)(i) for purposes
of computing petitioners' AMT.
Since 1969, the Internal Revenue Code has included minimum
tax provisions for both corporate and individual taxpayers. Tax
Reform Act of 1969, Pub. L. 91-172, 83 Stat. 487. Congress
enacted the minimum tax to prevent corporate and individual
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