Roy E. and Linda Day - Page 13

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            nonrefundable credits to completely eliminate regular tax                                    
            liability on $1 million of gross income, under petitioners'                                  
            theory, none of the $1 million of preferences would be added back                            
            to taxable income in computing AMTI.  Thus, the taxpayer would                               
            completely avoid Federal income tax liability, despite having an                             
            economic income of $1 million.                                                               
                  That petitioners seek to avoid less tax than is                                        
            hypothetically possible under their theory as shown by the                                   
            preceding scenario does not bolster their tenuous position.  See                             
            United States v. Deckelbaum, 784 F. Supp. at 1207.                                           
            2. Section 53 Permits an Indefinite Carryover of Disallowed                                  
            Section 29 Credits to Future Taxable Years                                                   
                  The putative use of the section 59(g) tax benefit rule is                              
            also inappropriate due to the availability of the section 53                                 
            minimum tax credit.  Congress recognized that taxpayers may not                              
            be able to use currently all of their section 29 credits because                             
            of the section 29(b)(5) limitation and therefore allowed the                                 
            indefinite carryover of these credits under section 53.  Sec.                                
                  Section 59(g) was added to the Code to give the Secretary                              
            the flexibility to provide relief in the event a taxpayer would                              
            not get a reduction in regular tax liability from an item that                               
            was includable in the AMT base.  Section 59(g) explicitly                                    
            authorizes relief only where an item "will not result in the                                 
            reduction of the taxpayer's regular tax for the taxable year for                             

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