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notice of deficiency, respondent determined that the deduction
was subject to section 67(a) and that petitioners were subject to
the alternative minimum tax.
OPINION
The parties agree that if petitioners' payments relating to
attorney's fees are not capital expenditures, such payments are
deductible pursuant to section 212. Petitioners' primary
contention is that their section 212 deduction for attorney's
fees is not subject to section 67(a), which allows miscellaneous
itemized deductions only to the extent that such deductions
exceed 2 percent of adjusted gross income (the 2-percent floor).
Respondent, however, contends that the deduction is subject to
the 2-percent floor. We agree with respondent. Section 67(a)
expressly permits miscellaneous itemized deductions only to the
extent such deductions exceed 2 percent of adjusted gross income.
The section 212 deduction is a miscellaneous itemized deduction
that is subject to this limitation. Alexander v. Commissioner,
72 F.3d 938, 946 (1st Cir. 1995), affg. T.C. Memo. 1995-51; secs.
63(d), 67(a) and (b); sec. 1.67-1T(a)(1)(ii), Temporary Income
Tax Regs., 53 Fed. Reg. 9875 (Mar. 28, 1988). Therefore,
petitioners' primary contention is meritless.
In the alternative, petitioners contend that their payments
are capital expenditures that increase the basis of Mrs.
Glassman's interest in Mr. Oddino's pension benefits. Pursuant
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