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deductions; (2) $603, the amount claimed by petitioners on their
Schedule A for State and local income taxes; (3) $1,079, the
amount claimed by petitioners on their Schedule A for medical and
dental expenses that exceeded 7.5 percent but not 10 percent of
their adjusted gross income; and (4) $6,000, the amount claimed
by petitioners on their Form 1040 for two personal exemptions.
The sum of these five adjustments is $61,774.
Petitioners’ alternative minimum taxable income, after
taking into account the foregoing five adjustments, for 2002 is
$59,565; i.e., -$2,209 taxable income plus adjustments of
$61,774. It follows that the alternative minimum taxable income
exceeds the applicable exemption amount of $49,000 by $10,565.
See sec. 55(d)(1)(A)(i). Petitioners’ tentative minimum tax is
therefore 26 percent of the taxable excess; i.e., 26 percent of
$10,565, or $2,747. See sec. 55(b)(1)(A)(i)(I). Clearly,
because the tentative minimum tax exceeds the regular tax of
zero, petitioners are liable for the AMT of $2,747. See sec.
55(a).
As the foregoing discussion reveals, the statutory scheme of
the AMT imposes a tax whenever the sum of specified percentages
of the excess of alternative minimum taxable income over the
applicable exemption amount exceeds the regular tax for the
taxable year. See sec. 55(a), (b)(1)(A), (c), and (d)(1)(A). In
other words, alternative minimum taxable income is the taxpayer’s
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