Charles C. Allen, III and Barbara N. Allen, et al. - Page 22




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               Respondent also quotes the following language from the                   
          General Explanation of the 1986 Act:                                          
                    STRUCTURE OF MINIMUM TAX AS AN ALTERNATIVE                          
               SYSTEM.--For most purposes, the tax base for the new                     
               alternative minimum tax is determined as though the                      
               alternative minimum tax were a separate and independent                  
               income tax system.  Thus, for example, where a Code                      
               provision refers to a ‘loss’ of the taxpayer from an                     
               activity, for purposes of the alternative minimum tax                    
               the existence of a loss is determined with regard to                     
               the items that are includable and deductible for                         
               [alternative] minimum tax, not regular tax, purposes.                    
                    In certain instances, the operation of the                          
               alternative minimum tax as a separate and independent                    
               tax system is set forth expressly in the Code.  With                     
               respect to the passive loss provision, for example,                      
               section 58 provides expressly that, in applying the                      
               limitation for minimum tax purposes, all minimum tax                     
               adjustments to income and expense are made and regular                   
               tax deductions that are items of tax preference are                      
               disregarded.                                                             
                    In other instances, however, where no such express                  
               statement is made, Congress did not intend to imply                      
               that similar adjustments were not necessary.  Thus, for                  
               example, for [alternative] minimum tax purposes it was                   
               intended that section 1211 (limiting capital losses) be                  
               computed using [alternative] minimum tax basis, that                     
               section 263A (requiring the capitalization of certain                    
               depreciation deductions to inventory) apply with regard                  
               to [alternative] minimum tax depreciation deductions,                    
               and that section 265 (relating to expenses of earning                    
               tax-exempt income) apply with regard only to items                       
               excludable from alternative minimum taxable income.                      
               [General Explanation of the 1986 Act, supra at 438; fn.                  
               refs. omitted and alterations made by respondent.]                       
               We do not believe that the “legislative history” referenced              
          by the parties displaces our plain and unambiguous reading of the             



               9(...continued)                                                          
               282, 1986-3 C.B. (Vol. 4) at 282.]                                       





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