- 5 -
appear to believe, however, this special treatment does not mean
that qualified dividends may be disregarded altogether in
calculating alternative minimum tax. Petitioners erroneously
omitted their qualified dividends from gross income, which
contributed to an understatement of their AMTI, which gave rise
to a deficiency as determined in the statutory notice.6
Petitioners appear to believe that they reported their
qualified dividends, and the tax thereon, consistent with the
literal terms of Form 1040, which they construe as treating
“qualified dividends” separately from “ordinary dividends” and
including only the latter in the calculation of adjusted gross
income.7 Whatever ambiguity might be found in Form 1040 and its
5(...continued)
the amount by which alternative minimum taxable income exceeds an
exemption amount (the “taxable excess”). Sec. 55(b)(1)(A).
Generally speaking, however, and ignoring certain qualifications
not relevant here, if a taxpayer has net capital gain, the amount
of tentative minimum tax thus determined cannot exceed the amount
that would be determined if the net capital gain were excluded
from the foregoing formula and instead were taxed at rates that
mirror those applicable for regular tax purposes under sec. 1(h).
Sec. 55(b)(3).
6 The record suggests that other items affecting the
computation of petitioners’ AMTI included the disallowance of
miscellaneous itemized deductions, see secs. 56(b)(1)(A)(i) and
67(b), and the disallowance of personal exemptions, see sec.
56(b)(1)(E). Petitioners have not challenged these computational
matters.
7 Form 1040 calls for “Ordinary dividends” to be reported on
line 9a, to be tallied in the calculation of adjusted gross
income; the form calls for “Qualified dividends” to be reported
on line 9b, which does not extend into the calculations column.
(continued...)
Page: Previous 1 2 3 4 5 6 Next
Last modified: March 27, 2008