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Petitioners timely filed a joint Federal income tax return,
Form 1040, for 1994. On their return, petitioners properly
claimed a total of 12 exemptions; i.e., two for themselves and 10
for their children. Petitioners reduced their income by the
aggregate value of the 12 exemptions, or $29,400.3
For 1994, petitioners itemized their deductions on Schedule
A. Included on Schedule A were deductions for medical and dental
expenses in the amount of $4,767.13 and state and local taxes in
the amount of $3,263.56.
Petitioners neither completed nor attached Form 6251
(Alternative Minimum Tax--Individuals) to their 1994 income tax
return, nor did petitioners report any liability for the
alternative minimum tax on line 48 of Form 1040.
In March 1997, respondent issued a notice of deficiency to
petitioners for the taxable year 1994. In the notice of
deficiency, respondent did not disallow any of the deductions or
exemptions claimed by petitioners on their Form 1040 for purposes
of the income tax imposed by section 1(a). Rather, respondent
determined that petitioners are liable for the alternative
minimum tax prescribed by section 55. In computing the
alternative minimum tax, respondent conceded that petitioners
have no items of tax preference within the meaning of section 57.
Respondent's determination of the alternative minimum tax is
3 For 1994, each exemption had a value of $2,450.
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