- 26 - Second, in its discussion of “other rules”, the General Explanation of the 1986 Act states: Under the Act, the application of the tax benefit rule to the minimum tax is within the discretion of the Secretary of the Treasury. Relief from either the regular or the minimum tax, when the source of the taxpayer’s tax liability changes, between taxable years, from one system to the other, is not appropriate solely by reason of the fact that a taxpayer has received no benefit under one of the systems with respect to a particular item. Congress both intended that the regular and minimum taxes constitute separate and parallel tax systems, and anticipated that the source of some taxpayers’ liability would change from year to year. Relief from the possible adverse impact of switching from one system to the other (e.g., the denial of deductions with respect to which there are timing differences as between the two systems) was intended to be provided by means of the minimum tax credit, along with the use of adjustments that give rise, in effect, to “negative preferences” with respect to items such as depreciation. Thus, application of the tax benefit rule in this context is not necessary, although the Treasury may, at its discretion, identify particular circumstances where such exercise is appropriate. [Id. at 472.] Given the clarity of the statute in the direct reference to and the definition of the term “taxable income”, we consider none of the uses of the word “parallel” by Congress or the Joint Committee to be a clear directive from Congress that it intended that the computation of AMTI would, as the parties suggest, “start from scratch”. Moreover, in the case of AMT NOLs, the rules for those NOLs did and still do run parallel.11 Thus, the mere fact that the prior and current systems of AMT NOLs are 11 The same is true as to AMT FTCs.Page: Previous 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Next
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