- 2 -
amount of the TJCs, pursuant to sec. 280C(a), I.R.C.,
and reported to Ps their proportionate shares of its
resulting net income (F’s resulting net income). Ps
computed their regular tax liability by including F’s
resulting net income in their taxable income. Ps were
not subject to the alternative minimum tax but had to
compute their alternative minimum taxable income (AMTI)
in order to ascertain for purposes of sec. 38(c)(1)(A),
I.R.C., the tentative minimum tax ceiling on the amount
of the TJCs that could be applied against their regular
tax liability. Ps computed their AMTI by deducting
their proportionate shares of F’s full wage expense
(i.e., the wage expense unreduced by the TJC). R
determined that Ps’ AMTI had to be computed using F’s
resulting net income and that the tentative minimum tax
ceiling limited Ps’ application of the TJC against
their regular income tax liabilities.
Held: Because sec. 280C(a), I.R.C., requires that
a wage deduction be reduced by the amount of the TJC,
and pt. VI, subch. A, ch. 1, subtit. A (secs. 55
through 59, I.R.C.) does not allow for an adjustment of
that reduction for purposes of the alternative minimum
tax regime, the portion of F’s wages equal to the TJC
is not deductible in calculating Ps’ AMTI.
Robert H. Kapp and John S. Stanton, for petitioners.
David R. Ferguson, for respondent.
OPINION
LARO, Judge: This case was submitted to the Court without
trial. See Rule 122.2 Petitioners petitioned the Court to
redetermine respondent’s determination of the following
deficiencies in their Federal income taxes for 1994 and 1995:
2 Rule references are to the Tax Court Rules of Practice and
Procedure. Unless otherwise indicated, section references are to
the Internal Revenue Code in effect for the subject years.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011