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liability, so that a taxpayer pays some tax regardless of the tax
breaks otherwise available to him under the RIT. See S. Rept.
99-313, supra, 1986-3 C.B. (Vol. 3) at 518. The AMT rules
accomplish this goal by eliminating favorable treatment to
certain items that are treated favorably for purposes of the RIT
(tax preference items). Secs. 55(b)(2)(B), 57(a).
The AMT is paid only if, and to the extent that, it exceeds
the taxpayer's RIT. Sec. 55(a). The starting point in computing
AMT liability is determining AMTI. AMTI is computed in the same
manner as regular taxable income except that the adjustments
provided in sections 56 and 58 are taken into account for AMTI,
and the tax preference items set forth in section 57 are not
permitted to reduce AMTI. Sec. 55(b)(2). To determine the
taxable amount of AMTI, AMTI is reduced by an exemption amount,
which, in the instant case, amounts to $40,000, subject to a
gradual phase-out as AMTI exceeds $150,000. Sec. 55(d). The AMT
rate is then applied to AMTI, as reduced by the exemption amount.
Sec. 55(b). For the taxable years at issue in the instant case,
the applicable AMT rate is 21 percent. The resulting tax figure
is then reduced by the alternative minimum foreign tax credit
(which petitioners did not have in any of the taxable years at
issue) to arrive at TMT. Sec. 55(b)(1)(A).
Next, RIT is compared to TMT. RIT is not reduced by any
nonrefundable credits, other than the foreign tax credit and the
possessions tax credit, before being compared to the TMT. Sec.
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