Roy E. and Linda Day - Page 5

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            section 59(g) by excluding from AMTI tax preferences and                                     
            adjustments which they allege do not provide a tax benefit, in                               
            order to increase the section 29 credits they can use against RIT                            
            for each year in issue.                                                                      
                  Section 29(b)(5) (renumbered 29(b)(6) for tax years                                    
            beginning after December 31, 1990) limits the section 29                                     
            nonconventional fuel source credit available in any year against                             
            RIT to the excess of a taxpayer's RIT (reduced by credits                                    
            allowable under sections 27 and 28) over the TMT for that year.                              
                  The complicated interplay between section 29, the AMT, and                             
            the tax benefit rule spawns the case before us.  In order to                                 
            readily understand the arguments of the parties in this matter,                              
            we must first examine the history and function of both the                                   
            minimum tax and the tax benefit rule.                                                        
                  A.  The Minimum Tax                                                                    
                  Since 1969, the Internal Revenue Code has included minimum                             
            tax provisions for both corporate and individual taxpayers.  Tax                             
            Reform Act of 1969, Pub. L. 91-172, 83 Stat. 487.  Congress                                  
            enacted the minimum tax to prevent corporate and individual                                  
            taxpayers from aggregating deductions to the point where they pay                            
            either no tax or a "shockingly low" tax.  First Chicago Corp. v.                             
            Commissioner, 842 F.2d 180, 181 (7th Cir. 1988), affg. 88 T.C.                               
            663 (1987).  Deductions which might otherwise result in this                                 
            outcome are classified as "tax preference items."                                            

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