- 34 -
unrecognized capital losses to be carried back to prior taxable
years. Sec. 1212(b). The Internal Revenue Code does not
explicitly address the treatment of capital losses for AMT
purposes. See secs. 55-59 (and accompanying regulations).
Petitioners are not securities dealers, and they held their
MGC shares strictly as investors. There is no dispute the MGC
shares in question are capital assets under section 1221. The
record also shows petitioner sold MGC shares in 2001 and that he
realized capital losses as a result.14 However, the capital loss
limitations of sections 1211(b) and 1212(b) restricted
petitioners’ ability to deduct these regular capital losses.15
Petitioners also realized AMT capital losses in 2001 taking
into account petitioner’s adjusted AMT basis in his MGC shares.
Petitioners contend that they may carry back these AMT capital
losses to reduce their AMTI in 2000. Petitioners argue the
capital loss limitations of sections 1211 and 1212 do not apply
to bar the carryback of AMT capital losses for purposes of
calculating AMTI. We disagree.
14 To avoid confusion between petitioner’s capital losses,
we shall refer to his capital losses for regular tax purposes as
his “regular capital losses”, and we shall refer to his capital
loss for AMT purposes as his “AMT capital loss”.
15 The effect of the capital loss limitations of secs.
1211(b) and 1212(b) for regular tax purposes is not in issue and
thus, is not discussed in detail.
Page: Previous 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 NextLast modified: May 25, 2011