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the Exodus shares on the date of exercise, December 21, 2000,
petitioner used the fair market value of the Exodus shares on
April 15, 2001, to calculate the excess AMTI.3 Petitioner
reported AMTI of $1,001,776 and tentative minimum tax (TMT) of
$251,428. By subtracting his regular tax from the TMT,
petitioner calculated an AMT of $116,973. Petitioner did not
report an alternative tax net operating loss (ATNOL or AMT NOL)
deduction on Form 6251.
On November 13, 2003, respondent sent a notice of deficiency
to petitioner. Respondent determined that petitioner was
required to use the fair market value of the Exodus shares on the
date of exercise (December 21, 2000) instead of their value on
the date reported by petitioner (April 15, 2001) to calculate his
AMTI. As a result, respondent increased petitioner’s AMTI from
$1,001,776 to $1,607,166, his AMT from $116,973 to $286,483, and
his total tax from $251,428 to $420,938.4 Accordingly,
3 Petitioner used the Apr. 15, 2001, fair market value on
the basis of proposed legislation that would have allowed
taxpayers to use the fair market value of shares on Apr. 15,
2001, instead of the fair market value on the date of exercise,
in calculating the spread between exercise price and fair market
value. See H.R. 2794, 107th Cong., 1st Sess. (2001). The
proposed legislation was never enacted.
4 There is a slight discrepancy between the fair market
value of the Exodus shares as reported by respondent in the
notice of deficiency ($23.25 per share) and as stipulated by the
parties ($23.3125 per share). As a result, respondent’s
calculations in the notice of deficiency are inconsistent with
the facts as stipulated. For purposes of consistency, we
(continued...)
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