Tuesday, May 21, 2013

Klaassen v. Commissioner case brief

Klaassen v. Commissioner case brief
76 T.C.M. (CCH) 20

CASE SYNOPSIS: Respondent Commissioner of Internal Revenue determined a deficiency in the federal income tax of petitioners, husband and wife taxpayers, attributable to I.R.C. § 55, and an addition to tax under I.R.C. § 6654(a). The taxpayers challenged the determination.

FACTS: At trial, the Commissioner conceded that the taxpayers were not liable for the § 6654(a) addition to tax. The Commissioner determined that the taxpayers were liable for the alternative minimum tax (AMT) prescribed by § 55. The effect of I.R.C. § 56 increased the taxpayers' taxable income. Because the taxpayers' tentative AMT exceeded the taxpayers' regular tax, the taxpayers were liable for the AMT in the amount of the excess. The taxpayers claimed that they were not liable for the AMT because: (1) the elimination of personal exemptions under the AMT adversely affected large families, contrary to congressional intent; and (2) the AMT violated various constitutional rights, particularly their right to religious freedom. The court decided that the AMT applied to the taxpayers based upon the clear statutory language. The court held that the AMT statute showed that the tax was triggered by the value of deductions and exemptions claimed, and the disallowance of such was unrelated to a taxpayer's religious beliefs. The court disagreed that the AMT unconstitutionally inhibited the free exercise of the taxpayers' religion and held that they were liable for the alternative minimum tax.

CONCLUSION: The court sustained the Commissioner's determination of the deficiency in the income tax. The court entered a decision for the Commissioner as to the deficiency. The court entered a decision for the taxpayers as to the addition to tax.

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