Kenneth David Perry and Linda Ruth Perry - Page 4

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          determination of a $252 alternative minimum tax.  Petitioners do            
          not contest the mathematical correctness of respondent’s                    
          computations.                                                               
                                     Discussion                                       
          1.  The Parties’ Contentions                                                
               Respondent maintains that the Sixteenth Amendment to the               
          United States Constitution “permits Congress to impose ‘taxes on            
          incomes, from whatever source derived’.”  Further, “Congress,               
          within its sole discretion, may determine the extent to which, if           
          at all, taxpayers may claim deductions from income they are                 
          required to report.”  Finally, respondent contends--                        
                    Petitioners have not shown, however, as they                      
                    must, that sections 165(f) and 1211(b)                            
                    violate constitutional guarantees of due                          
                    process and equal protection or breach the                        
                    authority granted to the Congress pursuant to                     
                    the Sixteenth Amendment to the Constitution.                      
               Petitioners respond that respondent’s references to                    
          deductions miss the point that “a capital loss is an income item.           
          A capital loss is not a deductible expense item.”  By disallowing           
          that part of the loss that exceeds $3,000, petitioners contend,             
          respondent is taxing petitioners on “income that does not exist.            
          Petitioners believe that Section 1211(b) violates the power                 
          granted Congress in the Sixteenth Amendment, and if the Court               
          agrees, it should rule accordingly.”                                        
          2.  Summary and Conclusion                                                  
               The Constitution does not require all income items to be               





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