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Federal income tax return and calculated the appropriate tax. He
then claimed a credit for the German income tax he had paid
against the income tax he owed to the United States, thereby
reducing his Federal income tax liability to zero. He did not
report any liability for the section 55 AMT.
Section 55(a) imposes an AMT on noncorporate taxpayers equal
to the excess of the “tentative minimum tax” over the “regular
tax”2 for the taxable year. That excess amount is paid in
addition to any regular tax owed. The AMT prevents a taxpayer
with substantial income from avoiding significant tax liability
through the use of exemptions, deductions, and credits. See
Urbanek v. United States, 866 F. Supp. 1414 (S.D. Fla. 1994),
affd. per curiam 71 F.3d 855 (11th Cir. 1996); S. Rept. 99-313,
at 518 (1986), 1986-3 C.B. (Vol. 3) 1, 518.
Noncorporate taxpayers may reduce their tentative minimum
tax by the foreign tax credit. See sec. 55(b)(1)(A). However,
that foreign tax credit is limited by section 59(a)(2)(A). The
foreign tax credit cannot offset more than 90 percent of the
tentative minimum tax figured. See id. The parties agree that
petitioner’s tentative minimum tax is $121,863. Ninety percent
of $121,863 is $109,676. Therefore, petitioner’s AMT, the
2 The term “regular tax” means “the regular tax liability
for the taxable year (as defined in section 26(b)) reduced by the
foreign tax credit allowable under section 27(a)”. Sec.
55(c)(1).
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