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determined on the basis of AGI. Accordingly, the gain
petitioners derived from the sale of their investment property is
includable in petitioners’ gross income, AGI, and taxable income.
Further, the gain is included when determining various
limitations and phaseouts based on AGI.
Petitioners do not contest that the gain from the sale of
the investment property is long-term capital gain; petitioners
argue only that long-term capital gains should be excluded from
gross income. However, pursuant to section 1222(3), the term
“long-term capital gain” means gain from the sale of a capital
asset held for more than 1 year if, and to the extent, such gain
is taken into account in computing gross income. Further,
section 1231 gains are treated as long-term capital gains only
if, and to the extent, the gains are taken into account in
computing gross income. Sec. 1231(a)(4)(A)(i). The Code
requires petitioners’ long-term capital gains to be included in
their gross income. Accordingly, petitioners’ claim that long-
term capital gains should not be included in income is contrary
to the Code and completely without merit.
Alternative Minimum Tax
The AMT provisions of the Code, sections 55-59, were enacted
to establish a floor for tax liability so that a taxpayer will
pay some tax regardless of the exclusions, deductions, and
credits otherwise available to him under the regular income tax
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Last modified: May 25, 2011