Klaassen v. Commissioner

The Klaassens, a couple with ten dependent children, claimed 12 personal exemptions totaling $29,400 on their 1994 tax return, along with $4,767.13 in medical and dental deductions and $3,263.56 in state and local tax deductions, reporting no items of tax preference and taxable income of $34,092.47; they did not report any alternative minimum tax (AMT) liability, but the Commissioner (defendant) determined a deficiency, finding them liable for the AMT based on a recalculation adding back their state/local tax deductions, the disallowed portion of their medical deductions, and their personal exemptions to their taxable income.