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There are five adjustments under section 56(b) that are
relevant herein in computing petitioners’ alternative minimum
taxable income. First, section 56(b)(1)(D) provides that a
deduction shall be allowed for taxable refunds allowable in
computing adjusted gross income. Second, section 56(b)(1)(A)(i)
provides that no deduction shall be allowed for any miscellaneous
itemized deduction as defined in section 67(b). Third, section
56(b)(1)(A)(ii) provides that no deduction shall be allowed for
any State and local income taxes. Fourth, section 56(b)(1)(B)
provides that medical and dental expenses shall be deductible
only to the extent that such expenses exceed 10 percent of the
taxpayer’s adjusted gross income. Fifth, section 56(b)(1)(E)
provides that no personal exemptions shall be allowed.5
The effect of the first adjustment is to decrease
petitioners’ taxable income by $1,210, the amount of petitioners’
taxable refund. The effect of the last four adjustments is to
increase petitioners’ taxable income by: (1) $55,302, the amount
claimed by petitioners on their Schedule A for miscellaneous
5 Although respondent’s computation in the notice of
deficiency of alternative minimum taxable income shortcuts the
statutory formula, respondent’s computation yields the same
amount of alternative minimum taxable income as does the
statutory formula. Specifically, respondent computes
petitioners’ taxable income with petitioners’ adjusted gross
income less Schedule A itemized deductions without including
personal exemptions, but he compensates for this omission by not
including personal exemptions within the adjustments of sec.
56(b) in computing the alternative minimum taxable income.
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Last modified: May 25, 2011