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taxpayer elects income averaging under section 1301, such
election precludes applicability of the alternative minimum tax
under section 55. Alternatively, if section 55 is applicable,
the offset to the tentative minimum tax, the "regular tax",
should be calculated without the benefit of section 1301 income
averaging.
In summary, the 1998 notice of deficiency determined a
deficiency in tax of $36,077, of which $31,532 relates to section
1301 income averaging, and $4,545 is the alternative minimum tax
under section 55. The 1999 notice of deficiency determined a
deficiency of $2,423, which relates only to the section 1301
income-averaging computation and the taxable income for 1 of the
base years, 1996.
Under section 1301, an individual engaged in the trade or
business of farming may elect to compute Federal income tax by
averaging over the prior 3-year period all or a portion of
taxable income attributable to farming. In general, an
individual who makes the election (1) designates all or a portion
of taxable income attributable to the farming business for an
election year as elected farm income; (2) allocates one-third of
the elected farm income to each of the 3 prior taxable years; and
7(...continued)
in which the NOLs for 2 of the base years in the income-averaging
computation are added back to the income for those years.
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Last modified: May 25, 2011