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In Merlo v. Commissioner, 126 T.C. 205, 211-212 (2006), on
appeal to the U.S. Court of Appeals for the Fifth Circuit, the
Court recently rejected the argument that the capital loss
limitations of sections 1211 and 1212 do not apply for purposes
of calculating a taxpayer’s AMTI. In so holding, we cited
section 1.55-1(a), Income Tax Regs., which states in pertinent
part that, except as otherwise provided: “[A]ll Internal Revenue
Code provisions that apply in determining the regular taxable
income of a taxpayer also apply in determining the alternative
minimum taxable income of the taxpayer.” In the absence of any
statute, regulation, or other published guidance which purports
to change the treatment of capital losses for AMT purposes, we
held the capital loss limitations of sections 1211 and 1212 apply
in calculating a taxpayer’s AMTI. Id. at 212.
Like the taxpayer in Merlo v. Commissioner, supra,
petitioners argue the instructions to lines 9 and 10 of Form 6251
for 2000 do not mention section 1211, and, therefore, section
1211 does not apply for purposes of calculating petitioners’
AMTI. Petitioners’ reliance on these instructions is misplaced.
It is settled law that taxpayers cannot rely on Internal Revenue
Service instructions to justify a reporting position otherwise
inconsistent with controlling statutory provisions. Johnson v.
Commissioner, 620 F.2d 153, 155 (7th Cir. 1980), affg. T.C. Memo.
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