Re: Richard A. Macdonald, CPA/EA Continues to Support IRS's Multi-Billion Flimflam Related to the Tax Treatment of State Income Tax Refunds

<KEBSCHULLW@xxxxxxx> wrote in message
news:1139115337.069985.272540@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Richard Macdonald wrote: NONSENSE!
<KEBSCHULLW@xxxxxxx> WROTE THE TRUTH!

Richard A. Macdonald. CPA/EA
SSG (Ret), USA, ADA 16P34
"Gib mir Schokolade und niemand wird verletzt!!!!"

BTW, were you ever a member of a "military intelligence" unit?

A simple look at the MOS would have told you if you had any wits about you.

If you were in the Army as you have indicated you should be familiar
with the terms FUBAR and SNAFU. Those terms certainly apply to IRS's
treatment of state income tax refunds. With your Army background, I
am not suprised that you accept IRS's bogus interpretations even
after being confronted with the fact that IRS has repeatedly accepted
returns that I have filed that comply with the IRC rather than the
bogus instuctions IRS.

Section 164. Taxes
a) General rule
Except as otherwise provided in this section, the following taxes
shall
be allowed as a deduction for the taxable year within which paid or
accrued:
(1) State and local, and foreign, real property taxes.
(2) State and local personal property taxes.
(3) State and local, and foreign, income, war profits, and excess
profits taxes.

Yes, State Taxes that are allowed to be deducted by individuals are
deducted under the provisions of Section 164 and taken on Schedule
A, Form 1040, Lines 5-8. These are allowed deductions from
Adjusted Gross Income (Section 62) in the calculation of Taxable
Income (Section 63).

Sec. 56. Adjustments in computing alternative minimum taxable income
(b) Adjustments applicable to individuals
In determining the amount of the alternative minimum taxable income of
any taxpayer (other than a corporation), the following treatment shall
apply (in lieu of the treatment applicable for purposes of computing
the regular tax):

(1) Limitation on deductions
(A) In general
No deduction shall be allowed -
(i) for any miscellaneous itemized deduction (as defined in section
67(b)), or
(ii) for any taxes described in paragraph (1), (2), or (3) of section
164(a). Clause (ii) shall not apply to any amount allowable in
computing adjusted gross income.

Yes, and the State Taxes allowed as deductions for Taxable Income by
individuals are disallowed for Alternative Minimum Taxable Income.

(D) Treatment of certain recoveries
No recovery of any tax to which subparagraph (A)(ii) applied shall be
included in gross income for purposes of determining alternative
minimum taxable income.

Yes, for AMTI any refund of State Taxes that is included in Gross Income
(Sec 61 & 111) is excluded from AMTI since the tax paid was disallowed
as a deduction for AMTI.

Here is how you apply the statutes. I will use state income tax
payments and refunds as examples. NOW PAY CLOSE ATTiENTION!

Step 1.

Determine whether section 164(a) or 56(b)(1))(A)(ii) APPLED in
determining the regular taxable income or the AMTI respectively in the
year a state income tax that yielded a tax benefit was paid.

Here is your problem, Any year in which Section 164(a)(1)-(3)
is applied for the seduction of taxes for regular Taxable Income
Section 56 also applies for the calculation of AMTI. It is never
one or the other but always both or neither.

"seduction of taxes" FUBAR!

No, typo, and is your only cretique is spelling and typing,
you show your inability to respond to the statements.

Your main problem is the inability to understand that any year in which
Section 164(a)(1)-(3) is applied for the reduction of taxes for regular
Taxable Income - Section 56 also applies for the calculation of AMTI.
It is never one or the other but always both or neither.

If the AMT was 0 on the return on which the state income tax
overpayment that produced the tax benefit was claimed, section 164(A)
APPLIED .

If AMT was Zero than (SNAFU!) regular tax exceded alternative tax
which is not relevant as AMTI was calculated anyways.

FUBAR! Your statement is irrelevant for the issue being discussed.

So illuminate us as to where the IRC sayw under what conditions you
calculate AMTI. If you cannot cite any, then it must be done every year.

If the AMT was greater than 0 on the return on which the state income
tax overpayment that produced the tax benefit was claimed, section
56(b)(1)(a)(ii) APPLIED.

No, both Section 164 was applied for the deduction of tax for
regular tax purposes AND section 56 was applied for AMTI.

But the only refunds that are legitimately entered on Line 10 of Form
1040 are refunds of taxes to which section 164(a) applied. Here is
what section 56(b)(1)(D) states,

(D) Treatment of certain recoveries
No recovery of any tax to which subparagraph (A)(ii) APPLIED shall be
included in gross income for purposes of determining alternative
minimum taxable income.

Yes and AMTI was calculated in prior years since the enactment
of the AMT, even if no AMT was paid in addition to regular tax,
thus 56(b)(1)(D) is applied.

Therefore, the instructions that excludes refunds entered on Line 10 of
Form 1040 from AMTI is a SNAFU.

No, htey are in strict accordance with the LAW.

Step 2.

If section 164 APPLIED, the refund is entered on Line 10 of Form 1040
and the increase in gross income and taxable income on Form 1040 and
the AMTI on Form 6251 attributable to the refund will equal the amount
entered on Line 10 OF FORM 1040. IRS instructions that produce
different results are FRAUDULENT.

If section 56(b)(1)(A)(ii) APPLIED, none of the refund will be
entered
on Line 10 of Form 1040. However, the portion of the refund that
produceD a tax benefit will be included in gross income BUT ONLY FOR
puposes of determining capital gain taxes for regular and AMT
purposes.
IRS instructions that produce different results are FRAUDULENT.

Section 56(b)(1)(A)(ii) applies EVERY year because AMTI is
calculated every year unless you can cite where in the IRC it
says it is NOPT (SNAFU!) calculated as Tentative Minimum Tax (TMT)
in additiion to the AMT addition is also a hard floor for the
allowability of some tax credits which may not lower regular
tax below TMT. So that even in years that AMT was not paid
TMT and AMTI have potential effects on regular tax.

Now what does that have to do with the the price of eggs in China?

Very simple, AMTI IS calculated every year, unless you can cite in the IRC
where it is not.

So, do you assert that AMTI is calculated only in years that AMT is paid?
Yes or No?


.

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