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sections 26(a)(1), 38(c)(4), and 55(e)(1). Any one of these
three sections would, if applicable, allow them the full use of
their credit in 2002.
Section 26(a)(2). This section works by setting the
tentative minimum tax as zero in the case of certain credits.
This allows the favored credits to offset both regular and
alternative minimum tax liability for certain years, including
2002. But the section applies only to credits “allowed by this
subpart.” “This subpart” refers to subpart A of subtitle A,
chapter 1, subchapter A, part IV, which lists various credits,
but it does not include either section 29 or 43 credits.
Recognizing this, the Holloways argue that the phrase “allowed by
this subpart” doesn’t mean just the credits specifically listed
in that subpart, but includes as well other credits that, like
the listed credits, are also personal and nonrefundable. They
then argue that their credit became a nonrefundable personal
credit when it passed to them through Holloway, Inc. But simply
calling a credit a “nonrefundable personal credit” by analogy
doesn’t make it allowable under Subtitle A, Chapter 1, Subchapter
A, Part IV, Subpart A--the only subpart to which section 26(a)(2)
applies.
Section 38(c)(4). Like section 26(a)(2), this section works
by setting the tentative minimum tax as zero in the case of
certain credits, essentially allowing them to be used to reduce
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Last modified: May 25, 2011