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subject to the alternative minimum tax (AMT), and whether he was
negligent when he failed to calculate the AMT on his 1992 Federal
income tax return. Petitioner also challenges the late-filing
penalty determined by respondent.
FINDINGS OF FACT
The stipulation of facts and the exhibits attached thereto
are incorporated herein by this reference.
At the time his petition was filed, petitioner was a U.S.
citizen residing in Ludwigshafen, Germany. Petitioner had
remained in Germany after retiring from the U.S. Army in 1985.
From 1986 to 1992, petitioner owned a business that contracted
with the U.S. military in Germany. In 1992, he received $567,331
in income from that business and reported an adjusted gross
income of $507,761. Included in that amount was interest income
of $1,421 and dividend income of $196, both of which are
considered U.S.-source income and were not taxed by the German
Government.
Petitioner paid 456,738 German marks (DM) for taxes
associated with the 1992 taxable year to the German Finanzamt,
the sovereign taxing authority of Germany. Using the applicable
exchange rate for that time (DM 1.56 to the dollar), that amount
equals $292,781. The parties agree that petitioner’s U.S.
tentative AMT liability for 1992 would have been $121,863 before
accounting for the alternative minimum tax foreign tax credit and
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