and itemized deductions could be effectively disallowed. As to both taxable bases, the NOL deduction and the basis of property were the same. Through TEFRA, Congress repealed the MT for noncorporate taxpayers and replaced it with a revised form of AMT. For the computation of AMTI, Congress generally: (1) Incorporated the old MT preferences by causing those amounts to increase AMTI relative to taxable income and (2) created new preferences which were either not deductible or not excludable from gross income. Congress also disallowed certain itemized deductions allowable in computing taxable income and provided for a separate alternative tax NOL deduction. The TEFRA AMT provision remained in effect from 1982 until its amendment by the 1986 Act, which expanded the AMT for individuals. S. Rept. 99-313, supra at 515, 521, 1986-3 C.B. (Vol. 3) at 515, 521. Through that act, Congress repealed the MT for corporate taxpayers and subjected them to the AMT. Congress also altered the computation of AMTI by providing for differences regarding when items of income or deductions are taken into account in computing taxable income and AMTI. The post-1986 AMT rules, sections 55-59, were enacted to achieve one overriding objective: to establish a floor for tax liability, so that a taxpayer pays some tax regardless of the tax breaks otherwise available to him under the regular tax system. S. Rept. 99–313, supra at 518, 1986– 3 C.B. (Vol. 3) at 518. The AMT rules accomplish this goal by eliminating favorable treatment of certain items that are treated favorably for purposes of the regular tax (tax preference items). Secs. 55(b)(2)(B), 57(a). The legislative history under the 1986 Act states explicitly that the computation of a corporation's AMTI begins with taxable income and that any adjustments required by the AMT regime are made from there. The report of the House Ways and Means Committee, for example, explains clearly and unambiguously that the starting point for computing a corporation's AMTI is "taxable income”. The report states: 1. Overview Explanation of Provisions The bill repeals the present law add-on minimum tax for corporations beginning in 1986, creates a new alternative minimum tax on corporations, and expands the alternative minimum tax on individuals. Corporations. Generally, the tax base for the alternative minimum tax on corporations is the taxpayer's regular taxable income, increased by the taxpayer's tax preferences for the year and adjusted by computing certain deductions in a special manner which negates the acceleration of such deductions under the regular tax. The resulting amount, called alternative minimum taxable income, then is reduced by a $40,000 exemption and is subject to tax at a 25-percent rate. The amount so determined may then be offset by the minimum tax foreign tax credit to determine a "tentative minimum tax." These rules are designed to ensure that, in each taxable year, the taxpayer must pay tax equaling at least 25 percent of an amount more nearly approximating its economic income (above the exemption amount). The net minimum tax, or amount of minimum tax due, is the amount by which the tax computed under this system (the tentative minimum tax) exceeds the taxpayer's regular tax. Although the minimum tax is, in effect, a true alternative tax, in the sense that it is paid only when it exceeds the regular tax, technically the taxpayer's regular tax continues to be imposed, and the net minimum tax is added on. Individuals.-The structure for the alternative minimum tax on individuals generally is the same as under present law, except that certain deferral preferences (such as incentive depreciation) give rise to adjustments to the minimum tax base over a period of years, in order properly to compute total income each year in light of the fact that, in later years, the regular tax deduction typically is smaller than the deduction would be if calculated on a straight line basis over a longer period. The alternative minimum tax on individuals differs from that applying to corporations in several respects. For example, there are some differences between the preferences applying to individuals and those applying to corporations, and certain itemized deductions that individuals can claim for regular tax purposes are not allowable under the minimum tax. [H. Rept. 99-426, supra at 308, 1986-3 C.B. (Vol. 2) at 308; emphasis added.] The Senate Finance Committee repeated these statements almost verbatim in its report.14 S. Rept. 99-313, supra at 521, 1986-3 C.B. (Vol. 3) at 521. Although these reports do not explicitly provide that the computation of an individual's AMTI also begins with taxable income, we decline to conclude that the calculation of AMTI is different for an individual given no clear provision to that effect in either the statute or the legislative history. Whereas the House and Senate 14 The General Explanation of the 1986 Act also includes these statements and clarifies that the word "generally" as used in the discussion on corporations means that regular taxable income is not used only where the taxpayer's tax base is other than taxable income; e.g., unrelated business taxable income, real estate investment trust taxable income, or life insurance company taxable income. General Explanation of the 1986 Act, supra at 436-437. The General Explanation of the 1986 Act states that a technical correction may be necessary to effectuate the exception to the general rule. Id. at 436 n.5. committee reports both state that the two regimes are considered "separate" systems, this simply means, as respondent acknowledges, that two taxes are involved. The mere fact that the two systems may also be "independent" does not necessarily mean that they are unrelated in all regards, or, in other words, parallel. Petitioners also rely on the fact that section 1.55-1(b), Income Tax Regs., does not prohibit them from deducting all of the wages for AMT purposes. Petitioners recognize in this regard that Congress authorized the Treasury Department to issue regulations on the AMT regime, that the Commissioner issued two rulings, Tech. Adv. Mem. 93-20-003 (May 21, 1993) and Priv. Ltr. Rul. 93-21-063 (May 28, 1993), before exercising this authority, that these rulings concluded that, for AMT purposes, the relevant taxpayers must make a separate computation of adjusted gross income in order to ascertain the charitable contribution limitation under section 170(b)(1), and that the Commissioner effectively overruled those rulings through the issuance of section 1.55-1(b), Income Tax Regs. We read nothing in section 1.55-1, Income Tax Regs., that is inconsistent with our opinion herein. That section provides: §1.55-1. Alternative minimum taxable income.-(a) General rule for computing alternative minimum taxable income. Except as otherwise provided by statute, regulations, or other published guidance issued by the Commissioner, all Internal Revenue Code provisions that apply in determining the regular taxable income of a taxpayer also apply in determining the alternative minimum taxable income of the taxpayer. (b) Items based on adjusted gross income or modified adjusted gross income. In determining the alternative minimum taxable income of a taxpayer other than a corporation, all references to the taxpayer's adjusted gross income or modified adjusted gross income in determining the amount of items of income, exclusion, or deduction must be treated as references to the taxpayer's adjusted gross income or modified adjusted gross income as determined for regular tax purposes. (c) Effective date. These regulations are effective for taxable years beginning after December 31, 1993. Petitioners' final argument is that the Court will frustrate congressional intent by not allowing them to deduct Foods' full wage expense. Petitioners contend that disallowing part of the deduction may place taxpayers in a worse position by electing the TJC than by not making the election. We dis agree that our holding herein frustrates congressional intent. The primary way to foster congressional intent is to apply, as we do here, the plain meaning of the statute as written. In this regard, the Supreme Court has stated: "courts must presume that a legislature says in a statute what it means and means in a statute what it says there." Conn. Natl. Bank v. Germain, 503 U.S. 249, 253-254 (1992) (citations and quotation marks omitted). We sustain respondent's determination on this issue. In so doing, we have considered all arguments made by the parties and have rejected those arguments not discussed herein as without merit. Accordingly, Decisions will be entered for respondent in docket Nos. 1287-00, 1288-00, 1289-00, 1290-00, 1293-00, and 1618-00, and decisions will be entered under Rule 155 in docket Nos. 1291-00 and 1292-00. BARRY R. DOWNING AND MARY A. DOWNING, PETITIONERS v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT Docket No. 2217-00L. Filed January 7, 2002. Petitioners (Ps) filed a return for 1995 in which they correctly reported their tax liability but did not pay the tax owed. Ps included $5,000 and an offer in compromise in which they offered to pay that amount in full settlement of the $32,561 tax they owed. Respondent (R) misplaced Ps' offer in compromise for about 1 year. R did not accept that offer in compromise or four similar offers in compromise made by Ps because R believed R could collect a substantially larger amount of Ps' 1995 tax liability. R issued to Ps a notice of intent to levy. Ps requested and received a hearing on the proposed collection action under sec. 6330, I.R.C. Ps contended that they had reasonable cause for their failure to pay tax and requested that interest be abated because R had misplaced their offer in compromise for 1 year. R issued a notice of determination to Ps stating that interest would not be abated and that collection would proceed. Held, we have jurisdiction under sec. 6330(d)(1)(A), I.R.C., to review R's determination to proceed with collection of the addition to tax under sec. 6651(a)(2), I.R.C. Held, further, Ps had no reasonable cause for failing to pay their 1995 income tax and thus are liable for Barry R. Downing and Mary A. Downing, pro se. COLVIN, Judge: The petition in this case was filed under section 6330(d)1 seeking our review of a determination by respondent's Appeals officer that respondent's proposed collection action may proceed. The issues for decision are: (1) Whether we have jurisdiction under section 6330(d)(1)(A) to review respondent's determination to proceed with collection of the addition to tax under section 6651(a)(2). We hold that we do; (2) whether petitioners had reasonable cause for not paying their 1995 income tax. We hold that they did not; (3) whether respondent's failure to abate interest for petitioners' 1995 tax year was an abuse of discretion.2 We hold that it was not. FINDINGS OF FACT Some of the facts have been stipulated and are so found. Petitioners lived in North Carolina when they filed the petition in this case. In 1995, petitioners sold and received payment for rental residential property in Virginia that they had depreciated. The sale price was $201,500, and petitioners' basis was $86,500. Petitioners used the proceeds from the sale to pay credit card debts. Petitioners did not receive a statement at closing showing the amount of sale proceeds from the house that would be reported to the Internal Revenue Service (IRS). Petitioners timely filed their 1995 income tax return. On it, they reported that they owed income tax of $32,561 after withholding, in part because of depreciation recapture and capital gains resulting from the sale of the rental property. When petitioners filed the return, they enclosed $5,000 and an offer in compromise in which they offered to pay that amount in full settlement of the $32,561 they owed for 1995. 1 Section references are to the Internal Revenue Code as amended. 2 Respondent concedes that the Tax Court has jurisdiction to review whether to abate interest. See Katz v. Commissioner, 115 T.C. 329, 340-341 (2000). |