- 17 -
(2) the amount of AMT determined applying the maximum rate of tax
on net capital gains, pursuant to section 55(b)(3). The
taxpayer’s regular income tax amount is then compared to the TMT.
If the TMT is greater than the regular income tax, the difference
is added to the regular tax amount to determine the final tax
liability for the taxable year. See sec. 55(a).
Petitioners argue that since their capital gains should not
be included in income, the capital gains should not be included
when determining AMTI. As stated above, petitioners’ capital
gains are included in their taxable income. Since the AMTI is
determined by making adjustments to taxable income, petitioners
cannot exclude their capital gains for AMT purposes.
Petitioners’ argument is without merit and contrary to the AMT
provisions.
We find no fault with respondent’s application of the AMT
provisions or the method by which respondent computed
petitioners’ AMT liability. However, the computations for
taxable income and AMT submitted with respondent’s answer are
computed without regard for the $300 of additional State income
tax allowed as an itemized deduction. Because this adjustment
affects taxable income and the AMT, the $300 additional itemized
deduction must be included in respondent’s Rule 155 computation.
Petitioners further argue that the AMT was created to apply
only to high-income taxpayers who pay little or no tax because of
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011