- 4 - Under sections 27(a) and 901, taxpayers may then reduce their reported regular Federal income tax liability so calculated by the amount of their foreign tax credits. In addition to taxpayers’ regular Federal income tax liability after reduction for foreign tax credits, certain taxpayers also may be liable for the AMT under section 55(a). The AMT equals the excess of taxpayers’ so-called tentative minimum tax liability (TMT) over their regular Federal income tax liability (after reduction of the latter tax liability for foreign tax credits). Sec. 55(a), (c)(1). Significantly, in the calculation of the TMT, sections 55(b)(1)(A) and 59(a)(2)(A) limit taxpayers’ available foreign tax credits to no more than 90 percent of the taxpayers’ pre- credit TMT (referred to as the “AMT foreign tax credit”).1 Petitioners acknowledge that, but for the tax treaty between the United States and the Czech Republic, the above AMT foreign tax credit limitation available to reduce petitioners’ TMT would be controlling. Petitioners argue, however, that any such 90- 1 Sec. 59 was added to the Internal Revenue Code by the Tax Reform Act of 1986, Pub. L. 99-514, sec. 701(a), 100 Stat. 2336, and sec. 59(a)(2) was deleted from the Internal Revenue Code by the American Jobs Creation Act of 2004, Pub. L. 108-357, sec. 421(a)(1), 118 Stat. 1514, applicable to tax years beginning after Dec. 31, 2004. Beginning for 2005, the 90-percent limitation on taxpayers’ AMT foreign tax credit will no longer apply, and taxpayers will calculate their AMT foreign tax credit in substantially the same manner as their regular foreign tax credit.Page: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011