                    T.C. Summary Opinion 2008-81



                       UNITED STATES TAX COURT



         DONALD JEROME FRITZ AND DONNA FRITZ, Petitioners v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 8948-07S.              Filed July 14, 2008.



     Donald Jerome Fritz and Donna Fritz, pro sese.

     Shawn L. Barrett, for respondent.



     GERBER, Judge:   This case was heard pursuant to the

provisions of section 74631 of the Internal Revenue Code in

effect when the petition was filed.   Pursuant to section 7463(b),

the decision to be entered is not reviewable by any other court,



     1
       Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for 2005, the taxable year in
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
                                - 2 -

and this opinion shall not be treated as precedent for any other

case.   This matter was submitted, under Rule 121, for summary

judgment on the question of whether petitioners are subject to

the alternative minimum tax (AMT).

     Summary judgment is intended to expedite litigation and to

avoid an unnecessary and expensive trial.    Fla. Peach Corp. v.

Commissioner, 90 T.C. 678, 681 (1988).    Summary judgment may be

granted with respect to a legal issue, if there is “no genuine

issue as to any material fact and * * * a decision may be

rendered as a matter of law.”   Rule 121(a) and (b); Craig v.

Commissioner, 119 T.C. 252, 259-260 (2002); Sundstrand Corp. v.

Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th

Cir. 1994).   The parties agree as to the material facts and that

this matter is ripe for summary judgment.

     In a January 17, 2007, notice of deficiency respondent

determined a $7,007 income tax deficiency in petitioners’ 2005

income tax.   The deficiency was not based on any adjustment to

income or disallowance of a deduction for regular tax purposes

but instead was based solely on respondent’s application of the

AMT to petitioners’ tax computation.    In their petition,

petitioners challenged the application of the AMT to their 2005

income tax.
                               - 3 -

     For their 2005 tax year petitioners reported $328,686 of

adjusted gross income and $316,725 of taxable income.    Included

in their computations were $35,847 in qualified taxable

dividends, $1,024 of foreign tax credits, and net capital gain

income of $246,872.   Using those figures and the standard

deduction, petitioners reported income tax of $46,806.

     Respondent, using the same figures, computed a tentative

minimum tax of $53,813.   This amount, reduced by the $46,806 of

regular income tax computed by petitioners, results in an AMT of

$7,007.

     The AMT Computation--Petitioners’ first objection to the

application of the AMT is that it contravenes a 2001 statutory

enactment of a 15-percent tax rate on capital gains.    Petitioners

assert that the application of the AMT makes the effective rate

on their capital gain income slightly more than 15 percent.    In

their own words, petitioners contend that the “application of AMT

[is] * * * rendered null and void” because of this contravention.

     Section 55 imposes the AMT and sets forth the interrelated

structure of the regular tax, capital gains tax, and AMT.    This

section is abundantly complex, but the computation of the correct

amount of tax can be achieved by reference to section 55 and

related and referenced provisions of the Internal Revenue Code.

     In the context of this case the AMT is computed by first

computing the regular tax without reference to the AMT.   Then the
                               - 4 -

tentative minimum tax, for married taxpayers filing jointly, is

computed at rates of 26 percent of a specified tax base up to

$175,000 and 28 percent for the excess.    After reducing certain

foreign tax credits, certain statutory adjustments are made, in

this case disallowance of the standard deduction and exemptions.

See secs. 55(b)(1) and (2), 56(b)(1)(E).    A $58,000 AMT exemption

for joint filers is provided, but the exemption is reduced by 25

percent of alternative minimum taxable income in excess of

$150,000.   Sec. 55(d)(1)(A), (3)(A).   The tentative minimum tax

is imposed on so much of the alternative minimum taxable income

as exceeds the exemption amount.

     In computing the AMT there is a special computational

provision for taxpayers with net capital gains.    Generally

speaking, the net capital gain income is multiplied by 15 percent

and the result is added to the tax on other income which is

computed in the manner described above.    Sec. 55(b)(3).

Following this computational provision, petitioners’ AMT is

computed at $7,007, which petitioners contend causes their net

capital gain income to be taxed at an effective rate slightly

greater than 15 percent because of the disallowance of the entire

amount of the standard deduction and exemptions.

     Petitioners’ position would require a change to the statute

that would apportion the disallowed items.    Ultimately, however,
                               - 5 -

respondent’s computation is in accord with the statutes, and

petitioners’ argument fails.

     Adequacy of the Statutory Notice of Deficiency--Petitioners

contend that respondent’s explanations of and determination in

the notice of deficiency are vague and inexact.   In particular,

petitioners allege that respondent’s explanation for the

determination was that “certain things” in the Forms 1040, U.S.

Individual Income Tax Return, and Form 6251, Alternative Minimum

Tax--Individuals, “appeared to justify” application of the AMT.

The notice, however, simply states that the item adjusted is the

AMT of $7,057.2

     Although respondent’s determination in the notice is terse,

it appears sufficient to advise petitioners of the amount and

nature of the determination.   See Scar v. Commissioner, 814 F.2d

1363, 1367 (9th Cir. 1987), revg. 81 T.C. 855 (1983).   We also

note that, in addition to specifying the nature and amount of the

adjustment, the deficiency notice was accompanied by a statement

of income tax examination changes wherein respondent provided

petitioners with a detailed computation of the deficiency,

including a complete comparison of the amounts reported on

petitioners’ return and the amounts computed or determined by




     2
       As a result of other computational adjustments, the net
amount of additional tax due is $7,007.
                                - 6 -

respondent.    Under those circumstances, we hold that the

notification to petitioners was sufficient.

     Equitable Estoppel--Petitioners’ final argument is that

respondent’s instruction booklets and forms are misleading and do

not portend the results in this case--an increased deficiency due

to the application of the AMT.3   In particular, petitioners

contend that respondent’s instructions and literature regarding

the AMT state that the purpose of the AMT is to increase the

proportion of income subject to tax, whereas the additional tax

in this case was due to the exclusion of the standard deduction

and personal exemptions and not to taxing capital gains at a rate

greater than 15 percent.    Because of this alleged discrepancy,

petitioners argue that they should not be subject to the AMT.

     In effect, petitioners’ argument is one of equitable

estoppel.    For estoppel to apply, however, petitioners must show:

A false representation or misleading silence; an error in a

statement of fact; ignorance of the true facts; reasonable

reliance on the statement; and adverse effect caused by the

statement.    See Norfolk S. Corp. v. Commissioner, 104 T.C. 13,

60, modified 104 T.C. 417 (1995), affd. 140 F.3d 240 (4th Cir.

1998).   Petitioners have not shown and/or alleged sufficient

facts and information to meet the essential requirements for the


     3
       Petitioners make this argument in broad terms and do not
reference specific instructions or explanations that illustrate
or support their contention.
                                 - 7 -

application of estoppel.   Accordingly, we give no further

consideration to this argument.

     Petitioners’ position in this case misses the point.          They

contend that the net result of the AMT computation is an

effective rate on their capital gains greater than 15 percent.

In reality, the tax on the capital gains was limited to 15

percent and the “additional tax” was attributable to the

elimination of preferences.   This Court recently addressed a

similar situation in Weiss v. Commissioner, 129 T.C. 175 (2007).

In Weiss, the deficiency in AMT resulted from the elimination of

miscellaneous itemized deductions and personal exemptions for

purposes of computing alternative minimum taxable income and not

because the rate of tax on net capital gain was higher under the

AMT than under the computational regimen.        Id. at 177.

     We have found that respondent correctly followed the statute

in reaching the determination that petitioners have a $7,007

income tax deficiency due to the application of the AMT.

Therefore, we are compelled to rule for respondent.

     To reflect the foregoing,

                                         Respondent’s motion for

                                 summary judgment will be granted

                                 and decision entered for

                                 respondent.
