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We therefore must consider the relationship between the
operating loss rules in the two tax systems and the book income
adjustment. As described in section 56(f)(1), the book income
adjustment equals 50 percent of the excess of adjusted net book
income over AMTI determined without regard to the book income
adjustment and the ATNOL deduction. Section 56(d), in turn,
defines the ATNOL deduction as the NOL deduction determined for
regular tax purposes under section 172 (i.e., NOL carryovers plus
carrybacks), adjusted as provided in sections 56, 57, and 58, but
not to exceed 90 percent of AMTI. The ATNOL deduction therefore
incorporates, and will be preceded by calculation of, the book
income adjustment of section 56(f).
Two principles thus emerge from the confluence of the
organization and the underlying legislative history of section
56. First, the book income adjustment must be taken into account
in computing the ATNOL arising in a given year and available for
carrying to other years or the amount of AMTI available in a
given year for absorbing amounts carried from other years.
Second, the loss limits of section 1503(c) must be respected in
calculating such ATNOL or AMTI. Neither party disputes these
premises. They differ, however, as to whether actualization of
these concepts demands resort to a subgroup approach for
computing the book income adjustment.
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