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Petitioners were not subject to alternative minimum tax but
were required to compute their AMTI in order to ascertain for
purposes of section 38(c)(1)(A) the tentative minimum tax (TMT)
ceiling on the amount of a TJC that may be applied against
regular tax liability. For purposes of computing his AMTI for
1994 and 1995, each petitioner claimed deductions for his
proportionate share of Foods’ full wage expense (i.e., the wage
expense unreduced by the TJC). Each petitioner calculated this
full wage expense by reference to a negative adjustment equal to
the TJC shown on his Schedules K-1. Each petitioner reported the
same adjustment on his 1994 and 1995 Forms 6251, Alternative
Minimum Tax--Individuals, which were attached to his Federal
income tax returns for the respective years.
Each petitioner claimed on his personal income tax returns
his proportionate share of the TJC and applied the TJC without
limitation by his TMT. The deficiencies at hand are the result
of the Commissioner’s recalculating petitioners’ AMTI for
purposes of ascertaining the TMT ceiling. In those
recalculations, the Commissioner did not allow each petitioner to
deduct as wages the portion of the claimed wages that was equal
to his proportionate share of Foods’ TJCs. Respondent determined
as a result of these recalculations that each petitioner’s
application of the TJCs for regular tax purposes was less than
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