Alston v. Comm'r

RUWE, Judge: This case was heard pursuant to the provisions of section 7463 of the Internal Revenue Code in effect when the petition was filed. ¹ Pursuant to section 7463(b), the decision to be entered is not reviewable by any other court, and this opinion shall not be treated as precedent for any other case.

Respondent determined a deficiency of $ 1,355.44 in petitioners' 2004 Federal income tax. After concessions by petitioners, ² this Court must decide the extent of petitioners' alternative minimum tax (AMT) liability.

Petitioners filed a joint Federal income tax return for 2004, *162 in which they reported $ 101,765 in estimated income tax payments and $ 4,176.49 of income tax withheld. Petitioners calculated that they were due a $ 6,141.73 refund. Upon receipt of the return, respondent reduced petitioners' claimed educator expense deductions by $ 213 and assessed the resulting additional tax of $ 67.80 as a mathematical error. ³ Respondent also assessed and imposed a section 6654(a) addition to tax of $ 878.08 for failure to pay estimated income tax. As a result, respondent reduced petitioners' refund from $ 6,141.73 to $ 5,195.85, a difference of $ 945.88. On February 13, 2006, respondent issued to petitioners a notice of deficiency in which he determined a deficiency of $ 1,355.44, which included $ 1,352 in AMT. ⁴

As a general rule, the Commissioner's determinations *163 set forth in a notice of deficiency are presumed correct, and the taxpayer bears the burden of proving that these determinations are in error. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). ⁵

Petitioners argue that they are liable for only $ 404 of AMT. The difference between respondent's and petitioners' AMT calculations is approximately equal to the reduction by respondent in the amount of petitioners' claimed refund. ⁶ Petitioners contend that this reduction in their claimed refund should be added to their regular tax as part of the calculation of their AMT liability, arguing that they could not have received an estimated tax "underpayment" penalty because they substantially overpaid their total required estimated income tax. Petitioners maintain that the reduction in their claimed refund was the result of an *164 increase in their regular tax paid (not an estimated tax penalty or addition to tax), which should, in turn, decrease their AMT liability.

As we have already discussed, the reduction in petitioners' refund appears to be the result of an increase in their tax liability of $ 67.80, on the basis of assessed mathematical errors on petitioners' return, and an assessed addition to tax of $ 878.08 for failure to pay estimated income tax. On their return, petitioners reported their tax liability as $ 80,557.95. In the notice of deficiency, respondent listed petitioners' assessed tax, before adding the AMT, as $ 80,632. Respondent also used the $ 80,632 assessed regular tax in the calculation to determine an AMT liability of $ 1,352. The AMT is a tax equal to the excess of the "tentative minumum tax" for the taxable year over the "regular tax" for the taxable year. Sec. 55(a). Although the difference between the amount of regular tax reported by petitioners and the amount of regular tax assessed by respondent is slightly more than $ 67.80, ⁷ we find that respondent *165 has incorporated the increase in regular tax resulting from mathematical errors into his calculation of petitioners' AMT liability. Therefore, we find that the inclusion of this adjustment in the AMT calculation has already benefited petitioners and cannot reduce respondent's AMT calculation.

With respect to the remaining $ 878.08 in dispute, respondent argues that it was due to an addition to tax for failure to pay estimated income tax pursuant to section 6654, and should not be part of the calculation of petitioners' AMT liability. ⁸ As we mentioned, the AMT is a tax equal to the excess of the "tentative minimum tax" for the taxable year over the "regular tax" for the taxable year. Sec. 55(a). Generally, the term "regular tax liability" means the tax imposed by chapter 1 of the Internal Revenue Code for the taxable year. Sec. 26(b)(1). Section 6654(a) provides an addition to tax for failure to pay estimated income taxes. Section 6654 lies in chapter 68 of the Internal Revenue Code and thus is not part of a taxpayer's regular tax liability. Accordingly, if petitioners' refund reduction is partially due *166 to the section 6654(a) addition to tax, their regular tax would not include that amount. Respondent has established that he summarily assessed and imposed a section 6654(a) addition to tax of $ 878.08 on the basis of petitioners' 2004 filed return. Contrarily, petitioners have failed to show that $ 878.08 of their refund reduction was due to anything other than the addition to tax imposed by respondent. ^9*167

Accordingly, we find that respondent correctly omitted the imposed section 6654(a) addition to tax when calculating petitioners' AMT liability. Therefore, we shall sustain respondent's determination. Contentions we have not addressed are irrelevant, moot, or meritless.

To reflect the foregoing,

Decision will be entered under Rule 155.