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Petitioners reduced their AMTI by the $27,500 negative tax
preference item.1 Otherwise, petitioners computed the $12 AMT
liability reported on the Form 6251 in a manner consistent with
respondent’s computation.
We are aware of no authority that allows taxpayers to reduce
AMTI as petitioners have, and we find that respondent properly
computed petitioners’ AMT liability. Accordingly, respondent’s
determination in that regard is sustained.
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing,
Decision will be
entered for respondent.
1 Sec. 59(e) allows a taxpayer to make an election to
deduct qualified expenditures for intangible drilling costs
ratably over a 60-month period. If this election is made with
respect to any qualified expenditure, then that amount is not
treated as a tax preference item under sec. 57, and sec. 56 does
not apply. Sec. 59(e)(6). We note, however, that an election
under sec. 59(e) does not result in the qualified expenditure’s
being deducted from AMTI as a negative tax preference.
In any event, the record does not establish that petitioners
made an election under sec. 59(e), and no evidence has been
introduced regarding the source of the negative tax preference
item.
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