Kathianne
06-22-2007, 02:17 PM
This will not be a problem for me, but possibly for many of you. Lots of links:
http://taxprof.typepad.com/taxprof_blog/2007/06/tax-court-appli.html
June 22, 2007
Tax Court Applies AMT to Nurse with $121k Salary; Rejects Argument that Congress Did Not Intend AMT to Apply to "Nonwealthy Working Class"
In Kamara v. Commissioner, T.C. Summ. Op. 2007-103 (6/21/07), the Tax Court rejected a taxpayer's argument that Congress did not intend the AMT to apply to the "nonwealthy working class":
Respondent determined a deficiency in petitioner’s 2003 Federal income tax in the amount of $4,176. The issue for decision is whether petitioner is liable for the AMT for the 2003 taxable year....
On the return petitioner indicated his status as head of household and claimed his parents as dependents. In 2003, petitioner worked as a licensed practical nurse [and] reported $121,309 in Form W-2, Wage and Tax Statement, wages on his return. ... [P]etitioner does not challenge respondent’s calculation of his AMT liability and agrees that the calculation was in accordance with the Internal Revenue Code. Petitioner’s objection is simply that respondent erred in applying the AMT to petitioner. He asserts that Congress did not intend for the AMT to apply to taxpayers like him, who are in the nonwealthy working class. He believes he should not be subject to the AMT since he works two jobs, night shifts, weekends, and overtime to support his family. Petitioner also points out that he did not claim any tax preferences that are targets of the AMT. ...
Petitioner provides no authority to support his position. His arguments are based on criticisms of the AMT in newspaper articles and his misreading of Internal Revenue Service Publication 17, Your Federal Income Tax. These are not authoritative sources of Federal tax law. ...Furthermore, petitioner’s arguments have been previously rejected by this Court. As set forth in the statute, the AMT does apply to lower-income taxpayers, not just the wealthy. ... Although tax preferences play a part in the computation of the AMT, a taxpayer may still be liable for the AMT even if he claimed no tax preferences. ...
We are not unsympathetic to petitioner’s concerns about the AMT’s reach. This Court has stated:
The unfortunate consequences of the AMT in various circumstances have been litigated since shortly after the adoption of the AMT. In many different contexts, literal application of the AMT has led to a perceived hardship, but challenges based on equity have been uniformly rejected.
Speltz v. Commissioner, 124 T.C. 165, 176 (2005), aff'd, 454 F.3d 782 (8th Cir. 2006). Congress enacted the AMT provisions, and we have no authority to disregard them.
See also Clare v. Commissioner, T.C. Summ. Op. 2007-104 (6/21/07):
Petitioners reported adjusted gross income of $405,807, including a long-term capital gain of $342,263, on their 2002 Federal Income Tax return. They computed tax on the capital gain at the maximum capital gains tax rate for 2002, 20%. They did not, however, compute or report AMT. ...
[P]etitioners maintain that the AMT, as applied to them, is inherently unfair because Congress never intended the tax to apply to taxpayers “in [their] situation.” ... [W]e begin by addressing the event which triggered application of the AMT; in this case, the sale of petitioners’ farm property. Since petitioners apparently did not purchase another residence within 12 months, they were required to report and accordingly, pay tax on, the proceeds from the sale as long term capital gain. While we sympathize with the fact that petitioners are middle-income taxpayers who, without the proceeds of sale, would not otherwise be subject to the AMT, we cannot change the facts, nor the statute, to provide them with equitable relief. The triggering event in this case was a one-time sale, making petitioners subject to the AMT. It is simply beyond the purview of this Court to decide otherwise. We also remind petitioners that this Court has consistently and repeatedly rejected challenges to proposed deficiencies based on the fairness of the AMT.
June 22, 2007 in New Cases
http://taxprof.typepad.com/taxprof_blog/2007/06/tax-court-appli.html
June 22, 2007
Tax Court Applies AMT to Nurse with $121k Salary; Rejects Argument that Congress Did Not Intend AMT to Apply to "Nonwealthy Working Class"
In Kamara v. Commissioner, T.C. Summ. Op. 2007-103 (6/21/07), the Tax Court rejected a taxpayer's argument that Congress did not intend the AMT to apply to the "nonwealthy working class":
Respondent determined a deficiency in petitioner’s 2003 Federal income tax in the amount of $4,176. The issue for decision is whether petitioner is liable for the AMT for the 2003 taxable year....
On the return petitioner indicated his status as head of household and claimed his parents as dependents. In 2003, petitioner worked as a licensed practical nurse [and] reported $121,309 in Form W-2, Wage and Tax Statement, wages on his return. ... [P]etitioner does not challenge respondent’s calculation of his AMT liability and agrees that the calculation was in accordance with the Internal Revenue Code. Petitioner’s objection is simply that respondent erred in applying the AMT to petitioner. He asserts that Congress did not intend for the AMT to apply to taxpayers like him, who are in the nonwealthy working class. He believes he should not be subject to the AMT since he works two jobs, night shifts, weekends, and overtime to support his family. Petitioner also points out that he did not claim any tax preferences that are targets of the AMT. ...
Petitioner provides no authority to support his position. His arguments are based on criticisms of the AMT in newspaper articles and his misreading of Internal Revenue Service Publication 17, Your Federal Income Tax. These are not authoritative sources of Federal tax law. ...Furthermore, petitioner’s arguments have been previously rejected by this Court. As set forth in the statute, the AMT does apply to lower-income taxpayers, not just the wealthy. ... Although tax preferences play a part in the computation of the AMT, a taxpayer may still be liable for the AMT even if he claimed no tax preferences. ...
We are not unsympathetic to petitioner’s concerns about the AMT’s reach. This Court has stated:
The unfortunate consequences of the AMT in various circumstances have been litigated since shortly after the adoption of the AMT. In many different contexts, literal application of the AMT has led to a perceived hardship, but challenges based on equity have been uniformly rejected.
Speltz v. Commissioner, 124 T.C. 165, 176 (2005), aff'd, 454 F.3d 782 (8th Cir. 2006). Congress enacted the AMT provisions, and we have no authority to disregard them.
See also Clare v. Commissioner, T.C. Summ. Op. 2007-104 (6/21/07):
Petitioners reported adjusted gross income of $405,807, including a long-term capital gain of $342,263, on their 2002 Federal Income Tax return. They computed tax on the capital gain at the maximum capital gains tax rate for 2002, 20%. They did not, however, compute or report AMT. ...
[P]etitioners maintain that the AMT, as applied to them, is inherently unfair because Congress never intended the tax to apply to taxpayers “in [their] situation.” ... [W]e begin by addressing the event which triggered application of the AMT; in this case, the sale of petitioners’ farm property. Since petitioners apparently did not purchase another residence within 12 months, they were required to report and accordingly, pay tax on, the proceeds from the sale as long term capital gain. While we sympathize with the fact that petitioners are middle-income taxpayers who, without the proceeds of sale, would not otherwise be subject to the AMT, we cannot change the facts, nor the statute, to provide them with equitable relief. The triggering event in this case was a one-time sale, making petitioners subject to the AMT. It is simply beyond the purview of this Court to decide otherwise. We also remind petitioners that this Court has consistently and repeatedly rejected challenges to proposed deficiencies based on the fairness of the AMT.
June 22, 2007 in New Cases