- 73 -
1.1502-80, Income Tax Regs.
Section 56(a) imposes, with respect to the income of every
corporation, a tax equal to 15 percent of the excess of the sum of
the items of tax preference over the greater of $10,000 or the
regular tax deduction.23 Section 56(c) defines the term “regular tax
deduction” to mean “an amount equal to the taxes imposed” by chapter
one of subtitle A of the Code for the taxable year (computed without
regard to the corporate minimum tax and certain other provisions),
reduced by the sum of certain credits. In Norwest Corp. & Subs. v.
Commissioner, T.C. Memo. 1995-600, which involved the same Norwest
Corp. that is the successor in interest to the UBC affiliated group
in this case, this Court held that the amount of the section 56(c)
deduction for an affiliated group of corporations is limited to the
actually imposed chapter one tax of the affiliated group. That
holding was based primarily on the rationale of Sparrow v.
23 One court has stated that the purpose of the corporate
minimum tax “is to make sure that the aggregating of tax-
preference items does not result in the taxpayer's paying a
shockingly low percentage of his income as tax.” First Chicago
Corp. v. Commissioner, 842 F.2d 180, 181 (7th Cir. 1988), affg.
88 T.C. 663 (1987). This Court in First Natl. Bank in Little
Rock v. Commissioner, 83 T.C. 202, 214 (1984), examined the
legislative history of the corporate minimum tax and distilled
two general principles:
First, the tax was intended to limit the tax benefits
and advantages from certain tax exemptions and special
deductions referred to as tax preference items. * * *
Second, Congress did not undertake a revision of the
Code provisions granting the tax preferences or other
substantive provisions such as the consolidated return
regulations. Instead, liability for this additional
tax is generally to be measured by the provisions
imposing it.
Page: Previous 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 NextLast modified: May 25, 2011