Norwest Corporation and Subsidiaries, Successor in Interest to United Banks of Colorado, Inc., and Subsidiaries, et al. - Page 65

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               equal to 15 percent of the amount by which the sum of                  
               the items of tax preference[16] exceeds the greater of--               
                         (1) $10,000, or                                              
                         (2) the regular tax deduction for the                        
                    taxable year (as determined under subsection                      
                    (c)).                                                             
                         *    *    *    *    *    *    *                              
                    (c)  Regular Tax Deduction Defined.--For purposes                 
               of this section, the term “regular tax deduction” means                
               an amount equal to the taxes imposed by * * * [chapter                 
               one of subtitle A of the Code] for the taxable year                    
               (computed without regard to this part and without                      
               regard to the taxes imposed by sections 531 and 541),                  
               reduced by the sum of the credits allowable under                      
               subparts A, B, and D of part IV.  * * *[17]                            
               C.  The Two Methods                                                    
                    1.  UBC's Method                                                  
               Under UBC's Method, which respondent contends is correct,              
          each member of the UBC affiliated group first determines its                
          separate “items of tax preference” pursuant to section 57.  Then,           
          each member's separate items of tax preference are aggregated to            
          establish the UBC affiliated group's total for items of tax                 
          preference (UBC's total preferences).  That total is reduced by             
          the UBC affiliated group's regular tax liability (the amount that           
          should appear on Schedule J of its return) (UBC's consolidated              
          regular tax) or, if there is no such liability, the minimum tax             
          exemption.18  The 15 percent minimum tax rate of section 56(a) is           

          16   Items of tax preference are set forth in sec. 57.                      
          17   The quoted provisions were in effect for the UBC affiliated            
          group's 1985 taxable year.  For purposes of this case, prior                
          versions of sec. 56, in effect for 1977, 1980, and 1984, were not           
          materially different from the 1985 version.                                 
          18   This sentence reflects a stipulation of the parties.  We               
                                                              (continued...)          



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