- 11 - she is entitled to the benefit of section 59(g), even in the absence of the regulation permitted thereunder. Section 59(g) provides: SEC. 59(g). Tax Benefit Rule.--The Secretary may prescribe regulations under which differently treated items shall be properly adjusted where the tax treatment giving rise to such items will not result in the reduction of the taxpayer’s regular tax for the taxable year for which the item is taken into account or for any other taxable year. On brief, petitioner maintains that The “differently treated” item in the AMT system (that is, the ISO Spread that cannot be offset against capital loss, as otherwise permitted by section 422(c)(2) or as occurs naturally on a sale that is not a disqualifying disposition on a decline in value of the ISO stock) is precisely the type of situation that ought to be remedied under section 59(g). Otherwise, the imposition of AMT in this situation can produce results that are inequitable and unfair, by imposing a tax on “phantom income” that is not true economic income, and accordingly that will never be subject to tax in the regular tax system. In the absence of the regulations that respondent is authorized, but not mandated, to promulgate under section 59(g), petitioner urges us, in effect, to do so. Petitioner cites Hillman v. IRS, 250 F.3d 228, 233 (4th Cir. 2001), revg. 114 T.C. 103 (2000), to support the proposition that in petitioner’s type of situation an exception can be made to the literal application of the statutory provision (here, the AMT) because the literalPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011