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221(b) sets the deduction limit specifically on qualified
education loan interest paid in 1998 at $1,000. Therefore,
assuming all other requirements of section 221 are met, for
petitioners’ student loan interest of $2,257.77, they would be
entitled to deduct only $1,000 as their education loan interest
deduction. Sec. 221(b).
Respondent contends that petitioners are not entitled to the
deduction because their modified AGI exceeds the phaseout amount
of section 221(b)(2). We agree. For tax year 1998, petitioners
reported an adjusted gross income of $99,213.90. Petitioners’
modified AGI equals the adjusted gross income determined without
regard to the deduction for the education loan interest. Sec.
221(b)(2)(C). For tax year 1998, petitioners’ modified AGI was
$101,471.67.2 Because petitioners’ modified AGI for 1998 is more
than $75,000, we hold that interest paid on petitioners’
qualified education loan is not deductible under section 221(b).
Respondent is sustained on this issue.
Section 55(a) imposes an alternative minimum tax on
noncorporate taxpayers equal to the excess of the “tentative
minimum tax” over the “regular tax”.3 The alternative minimum
2 $99,213.90 (adjusted gross income) plus $2,257.77
(student loan interest) = $101,471.67.
3 For petitioners, the term “regular tax” means “the
regular tax liability for the taxable year (as defined in sec.
(continued...)
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