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income means petitioners' taxable income determined with the
adjustments provided in section 56.
Petitioners' taxable income for 1994 was $34,092.47, the
amount reported on line 37 of Form 1040.
As relevant herein, the adjustments provided in section
56(b) are threefold. First, section 56(b)(1)(A)(ii) states that
no itemized deduction for State and local taxes shall be allowed
in computing alternative minimum taxable income. Second, section
56(b)(1)(B) states that in determining the amount allowable as a
deduction for medical expenses, a floor of 10 percent shall be
applied in lieu of the regular 7.5 percent floor. See sec.
213(a). Third, section 56(b)(1)(E) states that no personal
exemptions shall be allowed in computing alternative minimum
taxable income.
The effect of section 56(b)(1)(A)(ii), (b)(1)(B), and
(b)(1)(E) is to increase petitioners' taxable income by: (1)
$3,263.56, the amount claimed on petitioners' Schedule A for
State and local taxes; (2) $2,076.41, the difference between the
amount allowable as a deduction for medical expenses on Schedule
A and the amount allowable as a deduction for medical expenses
for purposes of the alternative minimum tax; and (3) $29,400, the
amount claimed on petitioners' Form 1040 for personal exemptions.
After taking into account the foregoing three adjustments,
petitioners' alternative minimum taxable income for 1994 equals
$68,832.44. Alternative minimum taxable income exceeds the
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