- 5 - The heart of this case involves the effect of the alternative minimum tax on the Holloways’ tax credit. And because the record is unclear on whether the Holloways are claiming a credit under section 29 or 43, we’ll look at both. We begin with a brief summary of the alternative minimum tax and its relation to either kind of credit. As we explained in Day v. Commissioner, 108 T.C. 11, 14 (1997), the purpose of the alternative minimum tax was to make sure that taxpayers pay some tax regardless of the tax breaks--like the ones in sections 29 and 43--generally available elsewhere in the Code. The alternative minimum tax works by eliminating favorable treatment for some of these breaks. The starting point in this complicated scheme is calculating a taxpayer’s alternative minimum tax income. Alternative minimum tax income begins with regular income tax income, but adjusts it (usually upward) by recalculating or eliminating certain losses, exclusions, and deductions listed in sections 56-58. Sec. 55(b)(2). The next step is to calculate the “tentative minimum tax.” This is done by taking the alternative minimum tax income and subtracting a defined exemption amount,5 then multiplying the resulting figure by the alternative minimum tax rate and 5 The exemption amount begins to phase out once the alternative minimum tax income reaches a certain threshold amount. Sec. 55(d)(3).Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
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