Noman Earl Holly - Page 4

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          noncorporate taxpayers, the tentative minimum tax is 26 percent             
          of the first $175,000 of "taxable excess" (alternative minimum              
          taxable income (AMTI) less the exemption amount) and 28 percent             
          of any remaining taxable excess.  AMTI is the taxable income of             
          the taxpayer for the taxable year, determined with the                      
          adjustments provided in sections 56 and 58.  Sec. 55(b)(2).                 
          Section 56(b)(1) provides that, for purposes of calculating AMTI,           
          no deduction is allowed for miscellaneous itemized deductions and           
          State and local real property taxes paid, unless such taxes are             
          deductible in determining adjusted gross income.  The exemption             
          amount for an unmarried taxpayer who is not a surviving spouse is           
          $33,750.  Sec. 55(d)(1)(B).                                                 
               We now turn to the question of whether respondent correctly            
          determined petitioner's AMT liability.  To compute petitioner's             
          AMT liability, respondent started with the amount of income                 
          reported by petitioner on his return before deducting the                   
          personal exemption ($16,337).4  Respondent then added to this               
          amount the deductions claimed for:  (1) Miscellaneous itemized              
          deductions ($30,247) and (2) real estate taxes ($725).  As a                
          result, respondent determined petitioner's AMTI to be $47,309.              
          Since this amount exceeded the exemption amount for unmarried               
          taxpayers by $13,559, respondent calculated the tentative minimum           

               4  Because of a mathematical error, the amount which should            
          have been reflected on petitioner's return and respondent's                 
          computation is $16,377.                                                     

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