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reported $27,159 of unrecaptured section 1250 gain, to which they
applied a 25-percent capital gains tax rate. Petitioners did not
include the $32,029 of reported section 1250 gain in the Schedule
D tax computation.
Petitioners did not file a Form 6251, Alternative Minimum
Tax--Individuals, with their 1997 tax return, nor did petitioners
report any amount of AMT on their tax return for the year at
issue.
On October 14, 1998, petitioners submitted a Form 1040X,
Amended U.S. Individual Income Tax Return, for the 1997 tax year.
In their amended return, petitioners (1) increased their itemized
deductions for the additional $300 of State tax paid, and (2)
reduced their deductions for the $89.10 miscellaneous itemized
deduction to which they are not entitled. In addition,
petitioners submitted a self-modified 1997 Form 1040, U.S.
Individual Income Tax Return, that excluded all capital gains
from income and contained a separate 20-percent capital gains tax
computation. In the explanation of changes on the amended
return, petitioners assert that long-term capital gains should
not be included in adjusted gross income and can be taxed at a
maximum rate of only 20 percent.
The Internal Revenue Code (Code) does not explicitly provide
for the filing or acceptance of amended returns. Badaracco v.
Commissioner, 464 U.S. 386, 393 (1984). Although the
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