Jazz owner Larry H. Miller has filed a suit against the Internal Revenue Service, asking U.S. District Judge J. Thomas Greene to resolve a complicated dispute over Miller's use of a Salt Palace lease as an income tax deduction.

The suit, filed in federal court Monday, focuses on Miller's amortization of a Salt Palace lease for the years 1985 and 1986. The dispute arose during a recent IRS audit of Miller's personal income tax returns."It's a disagreement over highly technical tax accounting principles," said Charles R. Brown, Miller's attorney. "There are no allegations by the IRS or us about any wrongdoing by anybody. We're just asking the court to clarify complex tax issues."

When Miller purchased the Utah Jazz, for tax purposes he allocated parts of that purchase price to the various assets he believed comprised the Jazz. He allocated part of the purchase price to the Jazz's Salt Palace lease, the suit said.

Miller amortized the value allocated to the lease over the life of the lease. But in a recent audit, the IRS determined that none of the Jazz purchase price is applicable to the team's agreement with the Salt Palace Arena. But if it is allowed, a portion of the purchase price allowed should not be amortized for tax purposes until September 1985. Miller began amortization earlier than that.

Miller argues that even though the lease did not begin until September 1985, it existed at the time he bought the NBA franchise and has a separate fair-market value to which a portion of the purchase price can legally be allocated.

Miller took a $109,408 deduction for the amortization of the lease in a 1985 tax return and a $123,085 deduction for 1986.

After Miller allocated a portion of the purchase price to the lease, he divided that value over the life of the lease and claimed portions of the value as a tax deduction.

The IRS' claim that Miller can't do that affects tax returns since 1986 and those to be filed in the future, Brown said. Miller plans to deduct amortization on the Salt Palace lease for some years to come, he said.

Even if the IRS prevails, Miller will not owe any taxes for 1985 and 1986, Brown said. Rather, the decision will determine how much of a refund Miller will receive from carrying net operating losses back from 1984.

The IRS made several other adjustments in Miller's tax returns, but most of those were in Miller's favor and are not contested in the suit. A federal suit is typical method of contesting an IRS audit.