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The District Court in Deckelbaum expressly declined to
extend the holding of First Chicago Corp. to cases involving the
AMT. United States v. Deckelbaum, 784 F. Supp. at 1208. The
issue was whether the taxpayers could adjust certain tax
preference items downward to determine the amount of AMT they
owed for 1985 under section 58(h). The taxpayers' revised
computation of tax, although consonant with the taxpayers'
approach in First Chicago Corp., was rejected as directly
contrary to the stated goal of the AMT. Id. In Deckelbaum,
because the taxpayer could not avoid AMT even in the absence of
any preferences, and because nonrefundable credits could not be
used to reduce AMT, the court held that a reduction of AMT under
then-section 58(h) because of excess nonrefundable credits was
not warranted. Id. at 1209.
In so holding, Deckelbaum clarified the important
distinction in the methods by which the add-on minimum tax and
the AMT are calculated. Id. at 1208. The add-on minimum tax was
computed on a tax base consisting of the sum of a taxpayer's tax
preferences less an applicable minimum tax deduction. The
minimum tax was then added to the taxpayer's RIT in order to
determine his total income tax liability. Thus, a taxpayer who
reported items of tax preference but who, irrespective of such
items, would have owed no tax because of the availability of
credits, subjected himself to tax liability under the add-on tax
provisions solely by virtue of the fact that he reported the tax
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