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small portion of their qualified section 29 credits could be used
in the taxable years 1988 through 1990.
To increase their permissible section 29 credit limitation,
petitioners assert that for the years 1988 through 1990 they did
not garner any tax benefits against RIT from certain tax
preference items and adjustments. Rather, petitioners posit that
sufficient section 29 credits would have enabled them to have the
same RIT liability in the absence of the preferences and
adjustments. Simply put, petitioners seek to avoid adding back
tax preference items to AMTI for which they allegedly received no
tax benefit against RIT in computing the limitation on section 29
credits they may take against RIT.
Respondent contends, on the other hand, that relief under
section 59(g) is not warranted simply because petitioners
received no current regular tax benefit with respect to
preferences, deductions, and/or credits.
We hold that the application of the section 59(g) tax
benefit rule is inappropriate in petitioners' case for the
following reasons: (1) The AMT limits the use of nonrefundable
credits as well as preferences and exclusions; (2) the disallowed
section 29 credits may be carried forward indefinitely to future
taxable years under section 53; (3) significant differences exist
between the AMT and the add-on minimum tax; and (4) petitioners
did in fact receive a current tax benefit against RIT from their
tax preference items.
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