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question of whether the calculation of AMTI includes the
wage-expense limitation of section 280C(a). Respondent asserts
it does. Respondent focuses primarily on section 280C(a) and
argues that a literal reading of that section always precludes a
taxpayer from deducting wages to the extent of a TJC. Respondent
acknowledges that a taxpayer cannot apply a TJC to reduce the
taxpayer’s AMT liability but argues that the wage-expense
limitation still applies in the calculation of AMTI because no
provision of the Code specifically provides otherwise.
Petitioners assert that the wage-expense limitation of section
280C(a) does not enter into the calculation of AMTI. Petitioners
point to the fact that the TJC is not an allowable credit for
purposes of calculating AMT and conclude from this fact that
section 280C(a) does not apply in the calculation of AMTI.
Petitioners assert that the AMT regime is a tax system that
operates “parallel” to the regular tax regime and that the
application of each provision of the Code to the AMT regime must
be measured solely within the parameters of that regime.4
4 We understand the parties’ use of the word “parallel” in
the context of the AMT and regular tax regimes to mean that the
regimes run independently of each other without ever meeting.
See Merriam-Webster’s Collegiate Dictionary 842 (10th ed. 1999).
In other words, according to the parties, a taxpayer must first
apply the provisions of the Code to compute regular tax and then
“start from scratch” to apply those provisions to compute AMT.
In this regard, the parties state, the de novo calculation of
AMTI is made without regard to any calculation made for regular
tax purposes.
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Last modified: May 25, 2011