- 18 -
approximate the amount of tax that they would have owed had they
been able to use the section 29 credits against RIT without
regard for the section 29(b)(5) limitation in the first place.
Petitioners, in effect, argue that the ceiling on the section 29
credit is raised for every dollar of credit they have.
Petitioners would transpose the express limitation of section
29(b)(5) into a dead letter. It seems unlikely that Congress
intended to legislate a limitation so elastic as to be no
limitation at all.
As a result of the section 29(b)(5) limitation, petitioners
cannot claim that sufficient section 29 credits would have
reduced RIT as much as their items of tax preference and that
therefore they received no benefit from the latter. In fact,
only a small amount of petitioners' credits was allowed in 1988,
and none was permitted in 1989 and 1990 against RIT pursuant to
section 29(b)(5). See supra pp. 3-4. Thus, petitioners' tax
preference items reduced their RIT to an extent that their
section 29 credits could not match. This sharply contrasts with
the situation in First Chicago Corp., in which the taxpayer's use
of foreign tax credits against RIT was not subject to an initial
limitation. First Chicago Corp. v. Commissioner, 88 T.C. at 665.
The instant case is also readily distinguishable from
Breakell v. Commissioner, 97 T.C. 282, 286-287 (1991), affd. in
part, revd. in part and remanded without published opinion 996
F.2d 1231 (11th Cir. 1993), in which this Court held that
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011