Roy E. and Linda Day - Page 11

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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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