Roy E. and Linda Day - Page 16

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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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