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was intended, having faced a financially-disastrous business
failure in the mid-1990s from which they are still struggling to
recover. Petitioners further point out that the State and local
income taxes and real estate taxes in issue represent accrued but
unpaid taxes from the 1990s that petitioners were only finally
able to pay in 2002 after making substantial “catch-up” payments.
In petitioners’ view, petitioners “had no ability to influence
the timing of these payments”, which “represent normally hard,
tax-deductible items when paid in cash”.
Discussion3
Our analysis necessarily begins with section 55, the section
of the Internal Revenue Code that imposes the AMT. Initially, we
note that the AMT is imposed in addition to the “regular tax” and
that the regular tax is, as relevant herein, the income tax
computed on taxable income by reference to the Tax Table. See
sec. 55(a), (c)(1); see also sec. 26(b). In petitioners’ case,
the regular tax is $963, which is the amount that petitioners
reported on line 55 of their Form 1040.
Pursuant to section 55(a), the AMT is the difference between
the “tentative minimum tax” and the regular tax. As relevant
herein, the tentative minimum tax is 26 percent of the excess of
3 We decide the issue in dispute without regard to the
burden of proof. See sec. 7491(a); Rule 142(a); INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992); Welch v. Helvering, 290
U.S. 111, 115 (1933).
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