- 3 - incorrectly deducted the legal and accounting fees as miscellaneous itemized deductions. They claim the fees should have been deducted directly from the trust income, or, in other words, from gross income, in the same manner that business or rental property expenses are directly deducted from business or rental income, respectively. Petitioners allege that if they had reported the fees in this manner, then the AMT would not apply. In their memorandum, petitioners contended that the application of the AMT to their situation is not fair and was not intended by Congress, but they did not pursue this argument at trial. The alternative minimum tax is imposed on taxpayers under section 55. The determination of an individual's alternative minimum tax requires a recomputation of the taxable income leading to a new tax base, the alternative minimum taxable income. Sec. 55(b)(2). In computing the alternative minimum taxable income, no deduction is allowed for miscellaneous itemized deductions as defined in section 67(b). Sec. 56(b)(1). Section 212 allows an individual a deduction for all the ordinary and necessary expenses paid or incurred during the taxable year for the production or collection of income or for the management, conservation, or maintenance of property held for the production of income. Sec. 212(1) and (2). The legal and accounting fees in this case are such expenses. Burch v. United States, 698 F.2d 575, 579 (2d Cir. 1983) (taxpayer allowedPage: Previous 1 2 3 4 5 6 Next
Last modified: May 25, 2011