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which the item is taken into account or for any other taxable
year." (Emphasis added.) In the instant case, however,
petitioners may obtain a tax benefit from their tax preference
items indirectly, through "liberated" section 29 credits that can
be applied against RIT in future taxable years pursuant to
section 53.
Petitioners argue that the fact that they may, at some
future time, indirectly derive a tax benefit from the tax
preference items via the freed-up section 29 credits is mooted by
First Chicago Corp. v. Commissioner, 842 F.2d 180 (7th Cir.
1988).
In First Chicago Corp., the taxpayer had no regular tax
liability for 1980 and 1981 in large part due to a plethora of
foreign tax credits. Id. at 180-181. The credits were
sufficient to offset in full the tax liability that would have
resulted if the taxpayer's regular income had not also been
reduced by preference items. Id. Thus, the taxpayer received no
current tax benefit from the preferences. Id. at 181. Moreover,
the excess credits liberated by the preferences had not yet
expired unused. Id.
Respondent argued that the add-on minimum tax should
nevertheless be imposed for 1980 and 1981 because of the
potential for tax reduction in subsequent years. However, this
Court, as well as the Court of Appeals for the Seventh Circuit,
was concerned that if the taxpayer paid tax on a preference item
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