Vichich v. Comm'r, 146 T.C. 12

Petitioner Nadine L. Vichich married William Vichich in 2002; William previously exercised incentive stock options (ISOs) in 1998, producing substantial AMT liability and an AMT credit carryforward reported on a 1998 joint return with his then-spouse Marla.
William died in 2004; Nadine filed various returns 2004–2009. She did not report or attach Form 8801 to returns from 2004–2006 but later amended 2007 and 2008 returns to claim AMT credits and filed a 2009 return claiming a $151,928 AMT credit (Form 8801 attached).
The IRS paid a 2009 refund but later issued a notice of deficiency disallowing the claimed AMT credit and determining a $151,928 deficiency (and an accuracy-related penalty that the parties later conceded).
The sole legal issue before the Tax Court was whether Nadine (the surviving spouse) could use an AMT credit that arose from William’s 1998 ISO exercise to offset her individual income tax liability for 2009.
The Court had to determine (1) whether the AMT credit passed to the surviving spouse on the spouse’s death, and (2) whether statutory provisions added in 2006–2008 (section 53(e) and (f) as amended) permitted use of a deceased spouse’s ISO-based AMT credit by the surviving spouse.

Issue	Vichich's Argument	Commissioner’s Argument	Held
Whether petitioner may use an AMT credit that originated from her deceased husband’s 1998 ISO exercise to offset her 2009 individual tax	Section 53(e)/(f) should be construed broadly and equitably to allow a surviving spouse to use long-term unused AMT credits arising from a deceased spouse’s ISOs	The Code and precedent do not permit transfer of a tax attribute (like AMT credit) to a surviving spouse unless the statute expressly provides for it	Held for Commissioner: petitioner cannot use the AMT credit; the credit did not transfer to her for 2009

United States v. Basye, 410 U.S. 441 (credit/deduction principles; income taxed to the person who earns it)
Commissioner v. Culbertson, 337 U.S. 733 (tax attributes are personal to taxpayer)
New Colonial Ice Co. v. Helvering, 292 U.S. 435 (substance over form—tax benefits generally not transferable)
Lucas v. Earl, 281 U.S. 111 (income taxed to the earner)
Calvin v. United States, 354 F.2d 202 (10th Cir.) (NOLs personal to the taxpayer who incurred them; marriage doesn’t transfer pre-marriage NOLs)
Zeeman v. United States, 395 F.2d 861 (2d Cir.) (spouses’ tax attributes merge only while married)
Coerver v. Commissioner, 36 T.C. 252 (married filing jointly does not create a single tax personality)