                       T.C. Memo. 2002-196



                     UNITED STATES TAX COURT



                  LAWRENCE MOORE, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 7591-01.              Filed August 7, 2002.


     Lawrence Moore, pro se.

     Michelle M. Lippert, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     DEAN, Special Trial Judge: Respondent determined a

deficiency in petitioner's Federal income tax of $4,233 for 1999.

     The only issue for decision is whether petitioner is liable

for the alternative minimum tax.
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                          FINDINGS OF FACT

     Petitioner resided in Toledo, Ohio, at the time the petition

in this case was filed.

     Petitioner timely filed his 1999 Federal income tax return.

Attached to the return was a Form W-2, Wage and Tax Statement,

from "Four-A Electric, Inc." reporting wages to petitioner of

$54,819.   Petitioner reported the amount of his wages on line 7

of the return.   On Schedule A, Itemized Deductions, of his

return, petitioner claimed deductions for State and local taxes

of $4,999, and charitable contributions of $100.   He also claimed

on Schedule A miscellaneous itemized deductions for unreimbursed

employee expenses of $39,224, after reduction for the 2-percent

floor of section 67.1

     From adjusted gross income of $55,207, petitioner deducted

total itemized deductions of $44,323, and a personal exemption of

$2,750, to arrive at taxable income of $8,134 on which he

computed a tax due of $1,219.   As petitioner had total

withholding credits of $6,197, he claimed an overpayment of

$4,978.    Petitioner did not attach Form 6251, Alternative Minimum

Tax-Individuals, to his 1999 income tax return, or report any

liability for the alternative minimum tax on line 51 of Form

1040, U.S. Individual Income Tax Return.



     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue.
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     The Commissioner sent petitioner a notice of deficiency

dated March 30, 2001, stating his determination that petitioner

is liable for the alternative minimum tax prescribed by section

55 in the amount of $4,233.

                              OPINION

     Since 1969, the Internal Revenue Code has included minimum

tax provisions for both corporate and individual taxpayers.    Tax

Reform Act of 1969 (TRA 1969), Pub. L. 91-172, 83 Stat. 487.

Congress enacted the minimum tax to prevent corporate and

individual taxpayers from aggregating deductions to the point

where they pay either no tax or a "shockingly low" tax.     First

Chicago Corp. v. Commissioner, 842 F.2d 180, 181 (7th Cir. 1988),

affg. 88 T.C. 663 (1987).   Section 301 of the TRA 1969, 83 Stat.

580, imposed a minimum tax on certain tax preference items to be

added on to a taxpayer's other tax liability.    The provisions

remained in effect, with only minor changes, as the only minimum

tax formulation in the Internal Revenue Code until 1978.    See

Revenue Act of 1978, Pub. L. 95-600, sec. 421(a), 92 Stat. 2871;

First Chicago Corp. v. Commissioner, supra; Day v. Commissioner,

108 T.C. 11 (1997).

     The Revenue Act of 1978 was supposed to repeal the add-on

minimum tax for individuals and replace it with a new alternative

minimum tax (AMT) beginning in 1979.    Other sources indicate,

however, that the two provisions co-existed in the Internal
                                - 4 -

Revenue Code until the add-on minimum tax was finally repealed by

the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA),

Pub. L. 97-248, sec. 201(a), 96 Stat. 411, and supplanted by an

amended alternative minimum tax.    E.I. du Pont de Nemours & Co.

v. Commissioner, 102 T.C. 1, 18 n.10, affd. 41 F.3d 130 (3d Cir.

1994), and affd. sub nom. Conoco, Inc. v. Commissioner, 42 F.3d

972 (5th Cir. 1995); United States v. Deckelbaum, 784 F. Supp.

1206, 1208 (D. Md. 1992).   This TEFRA AMT provision remained in

effect from 1982 until its amendment by the Tax Reform Act of

1986, Pub. L. 99-514, sec. 701, 100 Stat. 2320, which expanded

the AMT for individuals.    See S. Rept. 99-313 (1986), 1986-3 C.B.

(Vol. 3) 515, 521.

     The post-1986 AMT rules, sections 55-59, were enacted to

establish a floor for tax liability, so that a taxpayer will pay

some tax regardless of the tax breaks otherwise available to him

under the regular income tax rules.     See S. Rept. 99-313, supra,

1986-3 C.B. (Vol. 3) at 518.   The AMT rules accomplish this goal

by eliminating favorable treatment given to certain items for

purposes of the regular income tax.     Secs. 55(b)(2), 56, 57, 58.

     The AMT is paid only if, and to the extent that, it exceeds

the taxpayer's regular income tax.      Sec. 55(a).   The starting

point in computing AMT liability is determining the "alternative

minimum taxable income" (AMTI).    AMTI is computed in the same

manner as regular taxable income except that the adjustments
                                - 5 -

provided in sections 56 and 58 are taken into account for AMTI,

and the tax preference items set forth in section 57 are not

permitted to reduce AMTI.    Sec. 55(b)(2).   To determine the

taxable amount of AMTI, the AMTI is reduced by an exemption

amount, which in this case is $33,750, subject to a gradual

phase-out of the exemption amount as AMTI exceeds $112,500.      Sec.

55(d)(1), (3).   The AMT rate is then applied to AMTI, as reduced

by the exemption amount.    Sec. 55(b).   For the taxable year at

issue in this case, the applicable AMT rate is 26 percent.       The

figure resulting from the application of the AMT rate to the AMTI

is the tentative minimum tax (TMT).

     Next, the regular income tax is compared to TMT.     If TMT is

greater than the regular income tax, the TMT is the final tax

liability for the taxable year.    Sec. 55(a).

     In petitioner's case,2 the regular income tax is $1,219, the

amount petitioner reported on lines 40 and 49 of his Form 1040.

Pursuant to section 55(a), the AMT is the difference between the

tentative minimum tax and the regular tax.     The TMT is 26 percent

of the excess of petitioner's AMTI over his exemption amount of

$33,750.   See sec. 55(b)(1)(A)(i)(I).    As petitioner had no items

of tax preference in 1997, AMTI here means petitioner's taxable

income determined with the adjustments provided in section 56.


     2
      There are no factual issues in dispute that are relevant to
ascertaining the tax liability of petitioner in this case and the
Court therefore finds sec. 7491(a) to be inapplicable.
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     Petitioner reads the flush language following section

55(b)(2)(B) to mean that no adjustments provided by section 56

may be made to his taxable income to determine AMTI.    The flush

language states that if a taxpayer is subject to the regular tax,

he is subject to the AMT, and if the regular tax is determined by

reference to an amount other than taxable income, such amount

shall be treated as taxable income for AMT purposes.    Petitioner

argues that the flush language means that the AMT tax rate can

only be applied to his regular taxable income.    Petitioner

misunderstands the operation of the AMT.    It is a tax not on

taxable income but on "alternative minimum taxable income" in

excess of the exemption amount.   Sec.   55(b)(1); Ellison v.

Commissioner, T.C. Memo. 1995-427 (AMTI of individuals includes

taxable income plus State and local taxes, personal exemptions,

and miscellaneous itemized deductions).    And to determine AMTI

the statute requires the taxpayer to make adjustments to taxable

income to compute alternative minimum taxable income.    Sec.

55(b)(2)(A) and (B); Holly v. Commissioner, T.C. Memo. 1998-55

(AMTI included taxable income plus personal exemption,

miscellaneous deductions, and State taxes); Ellison v.

Commissioner, supra.

     Petitioner's taxable income for 1999 was $8,134.05, the

amount reported on line 39 of Form 1040.    As relevant herein, the

adjustments required by section 55(b)(2) as provided in section
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56(b) are threefold.   First, section 56(b)(1)(A)(i) provides that

no deduction shall be allowed for "any miscellaneous itemized

deduction (as defined in section 67(b))".    Second, section

56(b)(1)(A)(ii) states that no itemized deduction for State and

local taxes shall be allowed in computing alternative minimum

taxable income.   Third, section 56(b)(1)(E) states that no

personal exemptions shall be allowed in computing AMTI.

     The effect of section 56(b)(1)(A)(i), (ii), and (b)(1)(E) is

to increase petitioner's taxable income amount by:    (1) $39,224,

the amount claimed on petitioner's Schedule A as miscellaneous

deductions for unreimbursed employee expenses; (2) $4,999, the

amount claimed on petitioner's Schedule A for State and local

taxes; and (3) $2,750, the amount claimed on petitioner's Form

1040 for a personal exemption.

     After taking into account the foregoing three adjustments,

petitioner's AMTI for 1999 is $54,719.    Petitioner's AMTI exceeds

the applicable exemption amount of $33,750 by $20,969.    See sec.

55(d)(1)(A)(i).   Petitioner's tentative minimum tax is therefore

26 percent of that excess, or $5,452.    See sec.

55(b)(1)(A)(i)(I).   Because petitioner's TMT exceeds petitioner's

regular tax of $1,219, petitioner is liable for the alternative

minimum tax in the amount of such excess, $5,452 less $1,219, or

$4,233.
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     Accordingly, we sustain respondent’s determination that

there is a deficiency in petitioner's income tax for the year

1999.

     The Court has considered all other arguments advanced by

petitioner, and to the extent not discussed above, has found

those arguments to be irrelevant or without merit.

     To reflect the foregoing,

                                           Decision will be entered

                                      for respondent.
