Charles C. Allen, III and Barbara N. Allen, et al. - Page 2




                                         - 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