TAX COURT OPINION

Case: Chad W. & Aliza Kold-Warren
Docket Number: 24445-05S
Judge: Whalen
Opinion Type: summary
Filed: 11/21/2007
Pages: 7

T .C . Summary Opinion 2007-197 UNITED STATES TAX COUR T CHAD W . AND ALIZA KOLD-WARREN, Petitioners v_ . COMMISSIONER OF INTERNAL REVENUE, R spondent RECORDE D SERVIC E jl CAL . STAT . (cid:127)S r . JUDGE \N yAgLgjsj FILE S Docket No . 24445-05S . Filed November 21, 2007 . Chad W . and Aliza Kold-Warren, pro se . Michael S . Hensley , for respondent . WHALEN, Judge : This case was heard purs ant to th e provisions of section 7463 of the Internal Re enue Code in effect when the petition was filed . All section ref rences are to the Internal Revenue Code in effect for the year n issue, and all Rule references are to the Tax Court Rules of Practice an d Procedure, unless otherwise indicated . Pursu nt to section 7463(b), the decision to be entered is not re iewable by an y SERVED NOV 21 2007 -2- other court, and this opinion shall not be treated as precedent for any other cases . The Court issued a bench opinion in this case on November 16, 2006, and directed therein that the decision be entered pursuant to the procedures set forth in Rule 155 of the Tax Court Rules of'Practice and Procedure . In accordance with those procedures, each party submitted a computation of the deficiency . Respondent's Computation for Entry of Decision was filed March 21, 2007 . Petitioners' Alternative Computation for Entry of Decision was filed April 5, 2007 . Respondent's Reply to Petitioners' Alternative Computation for Entry of Decision, referred to herein as respondent's revised computation, was filed June 15, 2007 . The case is before the Court to resolve the differences between the parties regarding the amount of the deficiency to be entered by the Court . Respondent's original computation asks the Court to redetermine a deficiency for 2002 of $10,246 and to redetermine petitioners' liability for a penalty of $2,049 .20 under section 6662(a) . Respondent's revised computation concedes that the original computation is incorrect on a number of points . Respondent's revised computation asks the Court to decide that there is a deficiency of $5,913 in petitioners' income tax for 2002, as computed in respondent's revised computation, and to decide further that petitioners are liable for an accuracy- -3- related penalty under section 6662(a) in the mount of 20 percent of the deficiency, or $1,182 .60 . Petitioners' alternative computation ask the Court to decide that the amount of the deficiency is $4,225 . Petitioners ' computation does not discuss the accuracy-rely ted penalty under section 6662(a) . Nevertheless, we note that I he Court expressly sustained respondent's determination of the ac curacy-relate d penalty in its bench opinion, and petitioners, liability for the accuracy-related penalty under section 6662(a is not in issue in these proceedings under Rule 155 . The decisi n in this case will include petitioners' liability for an accurac : -related penalty i n the amount of 20 percent of the deficiency . A summary of the deficiency computations of both parties is appended hereto as Appendix . There are six d fferences between petitioners' computation and respondent's rev sed computation . The attached summary highlights those six dif erences . W e address each of them below . Item No . 1 : Petitioners' computation cl ims a capital loss of $1,848, whereas respondent's revised compu ation allows a capital loss of $1,719, a difference of $129 . Paragraph 13 of the Stipulation of Facts states that petition rs incurred a capital loss of $1,719 during 2002 . Accordin ly, the capita l loss allowed in respondent's revised computation is correct . -4- Item No . 2 : Petitioners' computation claims miscellaneou s deductions, subject to the 2-percent of adjusted gross income limitation, of $18,191, whereas respondent's revised computation allows a higher amount, $18,360, a difference of $169 . The amount allowed by respondent is the sum of $16,672, and $1,688 . These amounts are set forth in paragraphs 6 and 7 of the Stipulation of Facts, respectively . They relate to deductions for depreciation and other automobile expenses for the unreimbursed employee business use of petitioners' truck . Accordingly, the miscellaneous deductions, subject to the 2- percent of adjusted gross income limitation, allowed in respondent's revised computation, $18,360, is correct . Item No . 3 : Petitioners' computation calculates tax of $8,439, based upon taxable income of $59,421 .52, whereas respondent's revised computation calculates tax of $9,827, based upon taxable income of $59,384 . The tax computed by respondent is $1,388 more than the tax computed by petitioners . Respondent's tax computation, based upon the tax table for married individuals filing joint returns, is correct (i .e ., ($59,384-$46,700) x .27)) +$6,405 . Item No . 4 : Petitioners compute no alternative minimum tax, whereas respondent's revised computation computes alternative minimum tax of $1,688 . The alternative minimum tax is not mentioned in the Stipulation of Facts, and it was not raised as -5- an issue at trial . In their computation, peti ioners point out that alternative minimum tax of $1,553 was rep rted on their return for 2002, but no alternative minimum to was determined ""per exam" . In effect, petitioners' computati n suggests that alternative minimum tax is not applicable beca se none was computed in the notice of deficiency . We disagree . There is nothing in the rec rd to suggest that respondent conceded the alternative minimum to in this case, and petitioners have shown no reason why the alternative minimum tax is not applicable . No alternative minimum tax was determined by respondent in the notice of deficiency because there was n o excess of tentative minimum tax over regular t x, based upon the adjustments determined in the notice of defici ncy . See sec . 55(a) . Based upon the adjustments redetermine in these proceedings, the situation is different . This is simply a computational matter . We agree with responder that alternative minimum tax is applicable, and we agree with the amount computed in respondent's revised computation, $1,688 . Item No . 5 : Petitioners claim a child to credit of $500, the same amount claimed on their return, whereas respondent's revised computation allows zero . Respondent disallowed the child tax credit in the notice of deficiency as a result of the application of the limitation based on petitioners' adjusted gross income . See sec . 24(b)(1) . Similarly, ased upon the -6- adjusted gross income redetermined in these proceedings, petitioners are still not entitled to the child tax credit by reason of the limitation set forth in section 24(b)(1) . Item No . 6 : Petitioners' computation claims a credit for Federal income tax withheld of $5,714, whereas respondent's revised computation allows a credit of $5,602, or $112 less . We note that petitioners' return claimed a refund of $112 . Respondent's revised computation correctly reduced the amount of the credit for Federal income tax withheld by the amount claimed by petitioners as a refund on their return . For the reasons set forth above, we agree with the computation of the deficiency set forth in respondent's revised computation . Accordingly, Decision will be entered in accordance with respondent's reply to petitioners' alternative computation for entry of decision . -7- Appendi x Petitioner s Responden t Difference s Wages Taxable interest Dividends Capital gain or loss Rental real estate losses Other income : gamblin g 128,299 .00 2,456 .0 0 22 .00 -1,848 .00 -25,000 .0 0 18,947 .0 0 128,299 .00 2,456 .0 0 22 .00 -1,719 .00 -25,000 .0 0 18, 947 .0 0 -129 .0 0 Adjusted gross incom e 122,876 .0 0 123,005 .00 -129 .0 0 Medical and dental Taxe s Home interest Contribution s Miscellaneous deductions subject to 2% AGI limit 2% AG I Excess miscellaneous deductions Other miscellaneou s deduction s Total itemized deduction s -0- 9,003 .0 0 10,021 .00 750 .0 0 18,191 .0 0 2,457 .52 15,733 .4 8 -0- 9,003 .0 0 10,021 .00 750 .0 0 18,360 .00 -169 .0 0 2,460 .00 -2 .48 15,900 .0 -166 .5 2 18, 947 .00 18,947 .0 54,454 .4 8 54,621 .0 -166 .5 2 Adjusted gross income Total itemized deduction s 122,876 .00 54,454 .4 8 123,005 .0 -129 .00 54,621 .0 -166 .5 2 AGI less itemized deductions Exemption s 68,421 .52 -9,000 .0 0 68,384 .0 37 .52 -9,000 .0 -0- Taxable incom e 59,421 .5 2 59,384 .Oq 37 .5 2 Tax from tax table Alternative minimum ta x Less credits (child care) 8,439 .00 -0- 500 .00 9,827 .0 -1,388 .00 1,688 .0 -1,688 .0 0 -0- 500 .00 Total tax less credits 7,939 .00 11,515 .0 -3,576 .0 0 Federal tax withheld Deficiency 5,714 .00 2,225 .00 5,602 .0 112 .00 5,913 .0 -3,688 .00 1 2 3 4 5 6