- 4 - Petitioners are mistaken that qualified dividends may be disregarded in the calculation of alternative minimum tax. Alternative minimum tax is imposed, in addition to all other taxes imposed under subtitle A, upon a taxpayer’s alternative minimum taxable income (AMTI). Sec. 55(a); Allen v. Commissioner, 118 T.C. 1, 5 (2002). AMTI is defined as the taxpayer’s “taxable income” determined with adjustments provided in sections 56 and 58, and increased by items of tax preference described in section 57. Sec. 55(b)(2); Merlo v. Commissioner, 126 T.C. 205, 209 (2006), affd. 492 F.3d 618 (5th Cir. 2007). The Code generally defines “taxable income” as “gross income” less allowable deductions. Sec. 63(a). Section 61 expressly defines “gross income” to include, without limitation, “Dividends”. Sec. 61(a)(7). In the computation of alternative minimum tax, qualified dividends receive special treatment, insofar as they enter into the net capital gain of noncorporate taxpayers. That special treatment essentially caps the amount of alternative minimum tax by reference to a formula that taxes net capital gain at rates that mirror preferential rates that apply for regular tax purposes under section 1(h).5 Contrary to what petitioners 5 More particularly, the alternative minimum tax is equal to the excess of tentative minimum tax over the regular tax. Sec. 55(a). For a noncorporate taxpayer, the tentative minimum tax is generally imposed at graduated 26 percent and 28 percent rates on (continued...)Page: Previous 1 2 3 4 5 6 NextLast modified: March 27, 2008