1 Unless otherwise indicated, section references

hereafter are to the Internal Revenue Code in effect for the year

at issue.

T.C. Summary Opinion 2001-123

UNITED STATES TAX COURT

ROLLY J. AND JOANN M. SORRENTINO, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 3288-00S. Filed August 8, 2001.

Rolly J. Sorrentino, pro se.

Randall L. Preheim, for respondent.

COUVILLION, Special Trial Judge: This case was heard

pursuant to section 7463 in effect when the petition was filed.1

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

and this opinion should not be cited as authority.

Respondent determined a deficiency of $3,626 in petitioners'

1995 Federal income tax.
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2 The deficiency includes self-employment tax under sec.

1401(a) on self-employment income of $5,156 that petitioners

reported as nonemployee compensation on their 1995 return but for

which they paid no self-employment tax. Petitioners conceded

this issue at trial. Another adjustment in the notice of

deficiency disallowed petitioners' child care credit under sec.

24 in the amount of $901 because of respondent's determination

that petitioners were liable for the alternative minimum tax

(AMT). See sec. 24(d)(2). This adjustment will be resolved by

the Court's holding on the AMT issue.

The sole issue for decision is whether petitioners are

liable for the alternative minimum tax (AMT) under section 55.2

Some of the facts were stipulated. Those facts and the

accompanying exhibits are so found and are incorporated herein by

reference. Petitioners' legal residence at the time the petition

was filed was Wheat Ridge, Colorado.

Petitioners filed a joint Federal income tax return for 1995

on which they reported taxable income of $27,267, based on the

following gross income items:

Wages and salaries $81,644

Taxable interest income 520

Dividend income 27

Schedule E real estate loss (11,422)

Unemployment compensation 4,025

Nonemployee compensation 5,156

 Total income $79,950

Petitioners' return included a Schedule A, Itemized Deductions,

in which they claimed itemized deductions for the following:
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State and local taxes paid $ 6,033

Home mortgage interest 4,062

Charitable contributions 4,077

Job expenses and other miscellaneous deductions

 (in excess of 2% of adjusted gross income) 21,511

 Total itemized deductions $35,683

Petitioners' tax, prior to credits, was $4,091. Respondent made

no adjustments to either the income or the itemized deductions on

petitioners' return. Petitioners' return also included a Form

6251, Alternative Minimum Tax–-Individuals (the form), which

reflected zero alternative minimum tax. Respondent determined

that petitioners were liable for the AMT.

Section 55(a) imposes a tax equal to the excess of the

tentative minimum tax over the regular tax. The tentative

minimum tax for noncorporate taxpayers is equal to 26 percent of

so much of the taxable excess as does not exceed $175,000. See

sec. 55(b)(1)(A)(i). The taxable excess is that amount by which

the alternative minimum taxable income (AMTI) exceeds the

exemption amount. See sec. 55(b)(1)(A)(ii). The exemption

amount for married couples filing a joint return is $45,000. See

sec. 55(d).

AMTI equals the taxpayer's taxable income for the year

determined with the adjustments provided in section 56. See sec.

55(b)(2). In calculating AMTI, no deduction is allowed for

miscellaneous itemized deductions or for State and local taxes

paid, unless such amounts are deductible in determining adjusted
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gross income. See sec. 56(b)(1). Also, no deduction for

personal exemptions under section 151 is allowed. See sec.

56(b)(1)(E).

Petitioners incorrectly completed the form submitted with

their return in calculating their liability for AMT. On part III

of the form, petitioners correctly listed their exemption amount

as $45,000 on line 22. On line 23 (which subtracts the exemption

amount from the AMTI, line 21), petitioners listed $28,873, which

respondent corrected to $24,811, an adjustment that favors

petitioners. Line 24 then provides the following directions: "If

line 23 is $175,000 or less ($87,500 or less if married filing

separately), multiply line 23 by 26% (.26). Otherwise, multiply

line 23 by 28% (.28) and subtract $3,500 ($l,750 if married

filing separately) from the result". Petitioners calculated the

entry for line 24 on the basis of the second sentence recited

above in which they multiplied the amount on line 23 by 28

percent, from which they subtracted $3,500. The resulting

amount, which they listed on line 24, was less than their tax

liability of $4,091 shown on their Form 1040, U.S. Individual

Income Tax Return. Thus, since the tentative minimum tax was

less than the tax shown on Form 1040, petitioners entered -0- on

line 28, AMT. In the notice of deficiency, respondent calculated

the AMT as 26 percent of line 23 without a reduction of $3,500. 

This resulted in an amount on line 24 that exceeded the tax shown
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on petitioners' Form 1040, and this excess constitutes the AMT

determined in the notice of deficiency.

At trial, Rolly J. Sorrentino (petitioner) contended that

line 24 of the form is ambiguous as well as the instructions for

calculation of the amounts for that line.

The Court disagrees with petitioner. Section

55(b)(1)(A)(i)(I) and (II) provides, in pertinent part, that the

amount of the AMT in the case of noncorporate taxpayers is the

sum of:

(I) 26 percent of so much of the taxable excess as does

not exceed $175,000, plus

(II) 28 percent of so much of the taxable excess as

exceeds $175,000.

Since petitioners' taxable excess was $24,811, which is

considerably less than $175,000, the directions for line 24 of

the form in clear terms stated that petitioners' entry on line 24

should have been 26 percent of $24,811, and the $3,500 to be

subtracted from the resulting calculation only applied if

petitioners' taxable excess had been $175,000 or more. The Court

finds no ambiguity as to this entry or the basis upon which the

computation was to be made as directed on line 24 of the form. 

Petitioners, therefore, erred in making their computation for the

entry on line 24.
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Petitioners further contend they relied on the instructions

the Commissioner issued for the form. The portion of the

instructions petitioners rely on states:

General Instructions

Purpose of Form

The tax laws give special treatment to some types of income

and allow special deductions for some types of expenses. 

These laws enable some taxpayers with substantial economic

income to significantly reduce their regular tax. The

purpose of the alternative minimum tax (AMT) is to ensure

that these taxpayers pay a minimum amount of tax on their

economic income. Use Form 6251 to figure the amount, if

any, of your AMT.

Petitioner argued that he and his spouse did not have substantial

economic income, and, therefore, the AMT was not intended to

apply to them. While there may be differences of opinion as to

what constitutes substantial economic income, the short answer to

petitioners' argument is that whatever amounts result from the

computations provided for by the statute, those amounts

constitute the AMT. Whether that amount is inequitable is a

matter more appropriately left for congressional resolution. 

Benci-Woodward v. Commissioner, 219 F.3d 941 (9th Cir. 2000),

affg. T.C. Memo. 1998-395. Moreover, even if instructions are

incorrect or misleading, the Commissioner is not bound by

guidance he provides to assist taxpayers in filing tax returns

where such guidance is contrary to the law. Dixon v. United
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States, 381 U.S. 68 (1965); Automobile Club v. Commissioner, 353

U.S. 180 (1957).

The Court, therefore, sustains respondent.

 Reviewed and adopted as the report of the Small Tax Case

Division.

 Decision will be entered

 for respondent.