IRS RULES ON CALCULATION OF AMTI.
LTR 9321003
- Institutional AuthorsInternal Revenue Service
- Code Sections
- Index TermsAMTAMT, losses deniedAMT, rulesAMT, preference itemsAMT, adjustmentsNOL
- Jurisdictions
- LanguageEnglish
- Tax Analysts Electronic Citation1993 TNT 115-44
UIL Number(s) 0058.10-00
Date: * * *
Control Number:TR-32-255-92
LEGEND: * * *
ISSUES
(1) Is a taxpayer allowed to aggregate alternative minimum taxable income (AMTI), less the alternative minimum tax exemption amount, from different taxable years to determine taxable AMTI, or is the taxpayer limited to using the alternative tax net operating loss (ATNOL) deduction to take advantage of losses incurred in other taxable years?
(2) How is an ATNOL calculated for taxable years beginning after December 31, 1986?
FACTS
Prior to any regular tax net operating (NOL) carrybacks, Taxpayer reported 1985 taxable income of $1,527,459. In arriving at this figure Taxpayer deducted $3,421,942 of tax preference items (preferences). These preferences consisted of a capital gain deduction of $3,358,034, accelerated depreciation deductions in excess of straight line of $63,838, and percentage depletion in excess of basis of $70. Taxpayer incurred NOLs in 1986, 1987, and 1988 of $1,155,916, $2,564,378, and $1,163,272 respectively. Taxpayer's 1985 taxable income was eliminated because of NOL carrybacks
Prior to the carryback of any ATNOLs, taxpayer's 1985 AMTI was $4,950,971. As revised by Appeals, Taxpayer incurred ATNOLs in 1986, 1987, and 1988. The 1986 ATNOL was applied in part against Taxpayer's 1983 and 1984 AMTI leaving an unabsorbed balance of $1,070,973. According to Appeals applying the unabsorbed balance of Taxpayer's 1986 ATNOL, and Taxpayer's 1987 and 1988 ATNOLs to 1985 results in a revised AMTI of $535,853 and a revised alternative minimum tax (AMT) liability of $101,171.
Taxpayer contends that Taxpayer is not liable for AMT for 1985 because for the four year period beginning on January 1, 1985, and ending on December 31, 1988, Taxpayer had no "net economic income". Taxpayer ostensibly computed "economic income" by aggregating AMTI, less the AMT exemption amount, for each of the four taxable years. According to Taxpayer, computing "economic income" in this manner results in a net negative "economic income" for the four year period beginning on January 1, 1985, and ending on December 31, 1988. Taxpayer also cites section 58(h) of the Internal Revenue Code of 1954 and section 59(g) of the 1986 Code in support of Taxpayer's position.
LAW AND ANALYSIS
For taxable years beginning after December 31, 1982 and before January 1, 1987, section 55(a) of the Code 1 imposes AMT on a non- corporate taxpayer to the extent that 20 percent of the taxpayer's AMTI in excess of an applicable exemption amount 2 exceeds the taxpayer's regular tax. Section 55(b) defines AMTI as adjusted gross income (AGI) (determined without regard to the NOL deduction under section 172) increased by preferences and reduced by the following items:
(1) the ATNOL deduction, and
(2) the alternative tax itemized deductions (ATIDs), and
(3) any amount included in income under section 87 or 667.
Section 55(e) of the Code defines an ATID as a deduction (other than a deduction allowable in computing AGI) allowable under:
(1) section 165(a) for losses described in subsection (c)(3) or (d) of section 165,
(2) section 170 (charitable contributions),
(3) section 213 (medical expenses), 3
(4) section 55(e)(3) (qualified housing interest and other interest to the extent of qualified net investment income, and
(5) section 691(c) (deduction for estate tax).
For taxable years beginning after December 31, 1982, and before January 1, 1987, section 55(d)(1) of the Code defines the term "ATNOL deduction" as the NOL deduction allowable for the taxable year except that (1) AMTI is substituted for taxable income in section 172(b)(2) to determine the amount of ATNOL absorbed in any taxable year, and (2) the NOL (within the meaning of section 172(c)) for any loss year is adjusted as provided in section 55(d)(2). Section 55(d)(2) provides that in determining the ATNOL for a taxable year beginning after December 31, 1982, the NOL is (1) reduced by the preferences in the taxable year which are taken into account in computing the NOL, and (2) is computed by taking into account only those itemized deductions that are ATIDs, and which are otherwise described in section 172(c).
For a taxable year beginning after December 31, 1986, section 56(d)(2) of the 1986 Code generally provides that in determining an ATNOL the net operating loss under section 172(c) is (1) determined with the adjustments provided in section 56 and section 58, and (2) is reduced by preferences as defined in section 57. Section 56(b) generally provides that certain itemized deductions allowed in computing regular taxable income are not allowed in computing AMTI.
If Taxpayer's 1985 AMTI is computed in accordance with the aforementioned statutory provisions, it is clear that Taxpayer is only allowed to take 1986, 1987, and 1988 into account in computing 1985 AMTI to the extent that Taxpayer has ATNOLs in those years that are carried back to 1985. Therefore, Taxpayer's position is correct only if Taxpayer is entitled to some special adjustment that allows Taxpayer to compute AMTI in a manner different from that provided by the explicit language of section 55.
HISTORY OF THE AMT
Because Congress perceived that the "add-on" minimum tax (MT) was not adequately achieving its goals, Congress supplemented the MT for non-corporate taxpayers with a limited scope AMT in the Revenue Act of 1978 (1978 Act). Congress defined AMTI in the l978 Act as gross income reduced by the sum of the deductions allowed for the taxable year and the sum of any amounts included in income under section 667, and increased by an amount equal to the sum of the tax preferences for adjusted itemized deductions 4 and capital gains. A taxpayer is generally subject to the AMT to the extent that the taxpayer's AMTI multiplied by the appropriate AMT tax rates exceeds the taxpayer's regular tax. 5
In contrast to the MT which is just a tax on preferences, the AMT is a true alternative tax that is computed on a modified version of taxable income. AMT is only technically imposed to the extent a taxpayer's gross AMT (GAMT) 6 liability exceeds the taxpayer's regular tax liability. However, essentially what happens is that the taxpayer computes tax liability on regular taxable income and tax liability on AMTI and pays the higher amount. The AMT is designed to provide a floor under which a taxpayer's tax liability cannot fall irrespective of the amount of exclusions, deductions, or credits that the taxpayer has, if the taxpayer has a substantial level of economic income.
Preferences are not deductible in computing AMTI. However, in contrast to the MT it is not necessary to have preferences to have taxable AMTI. For example a taxpayer with a $100,000 salary and no deductions other than the standard deduction and deduction for personal exemptions has AMTI even though the taxpayer has no preferences.
Furthermore, in contrast to the MT, the method used to compute AMTI operates as an automatic tax benefit rule in that preferences that produce no regular tax benefit but merely cause a taxpayer's taxable income to become more negative, will not, when added back to taxable income, result in any taxable AMTI. S. Rep. No. 1263, 95th Cong., 2d Sess. 204 (1978).
When the AMT was first enacted the only non-refundable credit allowed against it was the foreign tax credit. Thus, a taxpayer without any preferences could be subject to the AMT to the extent that the taxpayer had other nonrefundable credits that reduced the taxpayer's regular tax liability below the taxpayer's GAMT liability. Congress subsequently viewed this as a harsh result. For taxable years beginning after December 31, 1979, but prior to January l, 1983, Congress amended the AMT provisions to allow taxpayers to use certain nonrefundable credits, other than the foreign tax credit, against AMT liability to the extent that the AMT liability is not attributable to net capital gains or the preference for adjusted itemized deductions.
In the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), Congress repealed the MT for non-corporate taxpayers and modified and expanded the scope of the AMT. Preferences that had formerly been subject to the MT were generally included in AMTI and the definition of AMTI was expanded to include new preferences not formerly subject to any type of minimum tax. The preference for adjusted itemized deductions was repealed, but only certain itemized deductions, ATIDs, were allowed in computing AMTI. Congress reinstated the prohibition against using any non-refundable credits other than the foreign tax credit against the AMT. For the first time Congress provided for a separate net operating loss deduction, the ATNOL deduction, in computing taxable AMTI.
The Senate Finance Report gives the following reasons for the TEFRA changes:
The committee has amended the present minimum tax provisions applying to individuals with one overriding objective: no taxpayer with substantial economic income should be able to avoid all tax liability by using exclusions, deductions, and credits. Although these provisions provide incentives for worthy goals, they become counterproductive when individuals are allowed to use them to avoid virtually all tax liability. The ability of high-income individuals to pay little or no tax undermines respect for the entire tax system and, thus, for the incentive provisions themselves.
S. Rep. No. 494 (Vol. 1), 97th Cong., 2d Sess. 108 (1982). The statement that the AMT should serve the overriding objective of ensuring that no taxpayer with substantial economic income be able to avoid significant tax liability by using exclusions, deductions, and credits is repeated in the legislative history to the 1986 Act. H.R. Rep. No. 426, 99th Cong., 1st Sess. 305-06 (1985); S. Rep. No. 313, 99th Cong., 2d Sess. 518 (1986).
FOR PURPOSES OF THE AMT "ECONOMIC INCOME" IS AMTI
Taxpayer asserts that for the four year period beginning on January 1, 1985, and ending on December 31, 1988, Taxpayer had no aggregate "economic income":
Because the annual accounting period is admittedly arbitrary and occasionally deceptive, we maintain that income and loss for the four years in question for Taxpayer (1985, 1986, 1987, and 1988) when aggregated (as section 172 tries to approximate) clearly demonstrate that economic income is zero. We use the term "economic income" to mean broad-based income as defined for purposes of the alternative minimum tax. . . .
It is not clear why alternative minimum taxable income totalled over the four year period does not equal the sum of that same income taken from each year's calculation, but it does not. The explanation for this apparent anomaly must lie in various deductions being disallowed in calculating the net operating loss carryovers, but the same deductions are still part of the preference items used to calculate the [alternative] minimum tax.
Page 4 of Taxpayer's submission.
The term "economic income" is used in the legislative history to both the MT and AMT. However, the term "economic income", standing alone, is ambiguous:
Economic theorists have not agreed on the definition of income. There is an extensive and tedious literature on the subject, enlivened by a few notable contributions. Some of the keenest analysts have concluded that it may we11 be impossible to define income rigorously.
Richard Goode, The Economic Definition of Income, in Comprehensive Income Taxation 1-2, (Joseph A. Pechman ed., 1977). Thus, whenever the term "economic income" is used it must be defined before one can know precisely what is meant.
After stating that no taxpayer with substantial economic income should be able to avoid all tax liability by using exclusions, deductions, and credits the Senate Finance Report to TEFRA continues as follows:
Therefore, the committee has provided an alternative minimum tax which is intended to insure that, when an individual's ability to pay taxes is measured by a broad-based concept of income, a measure which can be reduced by only a few of the incentive provisions, tax liability is at least a minimum percentage of that broad measure. The only deductions allowed, other than costs of producing income, are for important personal or unavoidable expenditures (housing interest, medical expenses and casualty losses) or for charitable contributions, the deduction of which already is limited to a percentage of adjusted gross income.
. . .
The provision adopts special rules for net operating losses. For purposes of the alternative minimum tax, net operating loss deductions will be determined by using a separate computation of minimum tax net operating losses and loss carryovers. Generally, this computation will take into account the differences between the regular tax base and the minimum tax base.
The amount of the net operating loss (under section 172(c)) for any taxable year, for purposes of the minimum tax, will be computed in the same manner as the regular net operating loss except that the items of tax preference arising in that year are added back to taxable income, and only those itemized deductions, (as modified under sec. 172(d)) allowable against the minimum tax base are taken into account. In any year to which a minimum tax net operating loss may be carried, the loss will be "used up" by the alternative minimum taxable income (as modified under sec. 172(b)(2)(A)) in the carryover year (whether or not the taxpayer is subject to the minimum tax that year).
S. Rep. No. 494 (Vol. 1), 97th Cong., 2d Sess. 108, 111 (1982).
The legislative history to TEFRA makes it clear that the vehicle Congress uses to ensure that a taxpayer pays a tax at least as great as a percentage of "economic income" is the AMT. Because the AMT tax base is AMTI, the legislative history implicitly provides that in the context in which it is used, the term "economic income" means AMTI. For Taxpayer's 1985 taxable year section 55(b)(1)(A) of the Code provides that the ATNOL deduction is used in calculating AMTI. The TEFRA legislative history is consistent with the statute. Thus, in computing "economic income" for a given taxable year Congress only intends for deductions from other taxable years to be taken into account to the extent those deductions generate ATNOLs that are available to be used in the taxable year. Taxpayer's computation of net "economic income" violates these rules.
For example, in aggregating AMTI for the period beginning on January 1, 1985, and ending on December 31, 1988, Taxpayer subtracted the AMT exemption amount for each taxable year. 7 However, the AMT exemption amount is not allowable in computing a taxpayer's ATNOL. Thus, an unused AMT exemption amount from one taxable period cannot be used to shelter AMTI from taxation in another taxable period.
Furthermore, under section 172(b)(2) of the Code the portion of an ATNOL deduction that is absorbed in one taxable year cannot be used to reduce AMTI in another taxable year. Taxpayer used a portion of Taxpayer's 1986 ATNOL to offset AMTI in 1983 and 1984 but failed to take this into account in computing net "economic income" for the four year period beginning on January 1, 1985, and ending on December 31, 1988.
The goal in interpreting statutes is to determine the true intent of Congress and there is no invariable rule for the discovery of that intent. United States v. American Trucking, 310 U.S. 534, 542 (1940). Every canon of statutory construction seems to have an exception. Karl N. Llewellyn, Remarks on the Theory of Appellate Decision and the Rules or Canons About How Statutes are to be Construed, 3 Vand. L. Rev. 395 (1950). Moreover, the extent to which legislative history should be used in construing statutes is a matter of some controversy. See Patricia M. Wald, The Sizzling Sleeper: The Use of Legislative History in Construing Statutes in the 1988-89 Term of the United States Supreme Court, 39 Am. U. L. Rev. (1990). However, no rule of statutory interpretation supports Taxpayer's position that AMTI, less the applicable AMT exemption amount, is to be aggregated from different taxable years in computing AMT liability.
First, and most importantly, the plain language of the statutes that impose AMT are contrary to Taxpayer's position. Second, the legislative history to the AMT provisions implicitly provide that for purposes of the AMT the term "economic income" is synonymous with AMTI, and in computing AMTI for a given taxable year losses from other taxable years may be taken into account only to the extent that those losses constitute ATNOLs. Moreover, even if the legislative history to the AMT simply evidenced an intent to impose a minimum amount of tax on "economic income" without also making it clear that "economic income" is synonymous with AMTI, as calculated under section 55 of the Code, Taxpayer's position would be untenable. Although it may be permissible to refer to legislative history to interpret statutes that are ambiguous or silent on a particular point, it has never been acceptable to reject clear statutory language in favor of ambiguous legislative history.
METHODOLOGY FOR COMPUTING AN ATNOL
Both the Taxpayer and Appeals have assumed that the methodology used to compute Taxpayer s ATNOLs for 1986 though 1988 is correct and that the legal issue is whether Taxpayer is entitled to relief under the tax benefit rule of section 58(h) of the Code (Taxpayer also cites section 59(g) of the 1986 Code). It is our conclusion that Taxpayer is not entitled to relief under either section 58(h) or section 59(g). However, at this point in time we do not think it would be useful to provide a detailed analysis on the tax benefit issue because we believe some errors were made in computing the ATNOLs, and these errors are the primary reason tax benefit questions have arisen.
Congress first provided for a separate ATNOL deduction in TEFRA. For taxable years beginning after December 31, 1982, and before January 1, 1987, an ATNOL is generally defined as the NOL for the taxable year, reduced by the items of tax preference arising in the taxable year which are taken into account in computing the NOL, and computed by taking into account only ATIDs for the taxable year otherwise described in section 172(c). An ATNOL could never be larger than the NOL, and unless there was an NOL there was no ATNOL. Thus, the ATNOL, if there was one, was a subset of the NOL.
Congress overhauled the structure of the AMT in the 1986 Act. The 1986 Act AMT is more of a separate but parallel system to the regular tax. In contrast to prior law, in which preferences are always added in computing AMTI, there may be timing differences with respect to when an item of income or deduction is taken into account for purposes of computing taxable income and AMTI. The adjusted basis of property may be different for AMT and regular tax purposes. Consequently, AMTI may be greater than, less than, or equal to regular taxable income.
The separate but parallel nature of the 1986 Act AMT is described in the "Bluebook" to the 1986 Act:
STRUCTURE OF MINIMUM TAX AS AN ALTERNATIVE SYSTEM. -- For most purposes, the tax base for the new alternative minimum tax is determined as though the alternative minimum tax were a separate and independent income tax system. Thus, for example, where a Code provision refers to a "loss" of the taxpayer from an activity, for purposes of the alternative minimum tax the existence of a loss is determined with regard to the items that are includible and deductible for [alternative] minimum tax, not regular tax, purposes.
Staff of the Joint Committee on Taxation, 99th Cong., General Explanation of the Tax Reform Act of 1986 438 (Comm. Print 1987).
Because there may be timing differences between when an item of income or deduction is taken into account for purposes of computing AMTI and taxable income, the ATNOL may be larger, smaller, or equal to the NOL. Furthermore, there could be an ATNOL and no NOL or vice versa. Because the 1986 Act AMT is generally a separate but parallel system to the regular tax, logically one would assume that the ATNOL should be computed using the same METHODOLOGY used in the computation of the NOL, only taking into account the section 56 and 58 adjustments and preferences under section 57 in determining the amount of "AMT gross income" and "AMT deductions". Furthermore, it would be logical to assume that the section 172(d) modifications are separately calculated for purposes of computing the ATNOL. The question is whether the statutory language adopted by Congress supports this result.
For taxable years beginning after December 31, 1986, section 56(d)(1)(B)(i) of the 1986 Code provides that in determining the amount of the ATNOL deduction for a taxable year, the NOL (within the meaning of section 172(c)) for any loss year shall be adjusted as provided in section 56(d)(2). Section 56(d)(2)(A) provides that in the case of a loss year beginning after December 31, 1986, the NOL for such year under section 172(c) shall be DETERMINED [emphasis supplied] with the adjustments provided in sections 56 and 58 and shall be reduced by the items of tax preference determined under section 57 for such year. However, the last sentence of section 56(d)(2)(A) provides that an item of tax preference shall be taken into account in computing an ATNOL only to the extent such item increased the amount of the NOL for the taxable year under section 172(c).
The Senate Report to the l986 Act provides the following explanation on how to compute the ATNOL for a taxable year beginning after December 31, 1986.
For purposes of the alternative minimum tax, net operating loss deductions are determined by using a separate computation of alternative minimum tax net operating losses and carryovers. Generally, this computation takes into account the differences between the regular tax base and the alternative minimum tax base.
The amount of the net operating loss (under section l72(c)) for any taxable year, for purposes of the alternative minimum tax, generally is computed in the SAME MANNER [emphasis supplied] as the regular tax net operating loss, with two exceptions. First, the items of tax preference arising in that year are added back to taxable income (or, as with depreciation, adjustments relating to those items are made), and second, for individuals, only those itemized deductions (as modified under section 172(d)) allowable in computing alternative minimum taxable income are taken into account.
S. Rep. No. 313, 99th Cong., 2d Sess. 538 (1986).
The statutory language is not a model of clarity and the legislative history to the 1986 Act is not free from ambiguity. However, we believe that the statutory language and the legislative history support the interpretation that the ATNOL should be computed by using the same methodology as used in computing the NOL rather than by making adjustments to the NOL. We find this interpretation especially compelling because the alternative would lead to absurd results in certain circumstances.
For example, if the ATNOL is computed by making adjustments to the NOL what should be done in situations in which there is no NOL? Section 172(c) of the 1986 Code defines an NOL as the EXCESS (emphasis supplied) of the deductions al1owed by chapter 1 of the Code over gross income, such excess being computed with the modifications specified in section 172(d). Thus, there is no such thing as a negative NOL. If there is no NOL the NOL is zero. If the ATNOL is calculated by starting with the NOL (zero) and making adjustments directly thereto, this wi1l lead to absurd results.
For example, assume that the gross income and deductions of taxpayers A and B are as set forth below:
Taxpayer A Taxpayer B
___________ ___________
Gross Income $ 100,000 $ 50,000
Depreciation Allowed for
Regular Tax Purposes 50,000 50,000
____________ __________
AGI 50,000
Standard Deduction 3,000 3,000
Personal Exemption 2,000 2,000
_____________ __________
Taxable Income $ 45,000 $ (5,000)
Neither taxpayer has a NOL. For purposes of computing their AMTI both A and B have a depreciation deduction of $150,000. If the ATNOL is computed for each taxpayer by starting with the NOL (zero) and making the section 56(a)(1)(A) adjustment of $100,000 directly to the NOL both A and B will have the same ATNOL ($100,000), even though A and B have the same deductions and A's gross income is $50,000 greater than B's. Such a result makes no sense.
On balance we believe than the statutory language, the legislative history to the 1986 Act, and the fact that the alternative interpretation would lead to absurd results, requires that for taxable years beginning after December 31, 1986, ATNOLs be computed not by starting with the NOL but by using the same METHODOLOGY as used in computing the NOL, taking into account the adjustments in sections 56 and 58 and the items of tax preference as defined in section 57. Thus, the section 172(d) modifications should be separately computed in determining the ATNOL.
The schedules showing the computation of Taxpayer's ATNOLs all start with the regular tax NOL 8 and add or subtract adjustments, or add preferences to determine the amount of Taxpayer's ATNOL. It appears that for at least one taxable year this method of computation understates Taxpayer's ATNOL.
According to the information submitted, Taxpayer had $367,749 of itemized deductions for l987, only $252,668 of which were allowable in computing Taxpayer's regular tax NOL for 1987 because of the limitation of non-business deductions to the amount of non-business income.
Reducing the $367,749 by the $91,878 of non-ATIDs shown on Attachment 1 results in AMT itemized deductions of $275,871 as reported on Taxpayer's schedule of "economic income". If the amount of non-business income is the same for regular tax and AMT purposes, Taxpayer has $275,871 of ATIDs for 1987 and $252,668 of non-business income for 1987. Thus, Taxpayer should be able to deduct $252,668 of the ATIDs in computing Taxpayer's ATNOL for 1987, which is the same amount of non-business deductions that Taxpayer is able to deduct in computing Taxpayer's NOL for 1987.
Reducing Taxpayer's NOL, which already takes into account the limitation of non-business deductions to $252,668, by the non-ATIDs in computing Taxpayer's 1987 ATNOL understates Taxpayer s ATNOL. This occurs because the non-ATIDs have already been eliminated from the computation of Taxpayer's NOL because of the limitation of non- business deductions to non-business income.
Because we do not have sufficient information to recompute Taxpayer's 1987 and 1988 ATNOLs we have not done so. However, those ATNOLs should be recomputed based on the methodology for computing ATNOLs set forth in this memorandum.
CONCLUSIONS
(1) A taxpayer is not allowed to aggregate AMTI, less the applicable AMT exemption amount, from different taxable years to determine taxable AMTI. A taxpayer must follow the rules for computing ATNOL deductions in using losses from other taxable years in computing AMTI.
(2) For taxable years beginning after December 31, 1986, an ATNOL is computed by using the same METHODOLOGY used in computing the NOL, taking into account the adjustments in sections 56 and 58 and the items of tax preference as defined in section 57. Thus, the section 172(d) modifications are separately computed in determining the ATNOL.
FOOTNOTES
1 Unless stated otherwise or the context indicates otherwise, references to sections, or to sections of the Code, are to be understood as referring to sections of the Internal Revenue Code of 1954 as applicable to the taxable year in question or under discussion.
2 In the case of an individual who is not married (as defined in section 143 of the Code) and is not a surviving spouse (as so defined) section 55(f)(1)(B) provides an AMT exemption amount of $30,000.
3 In computing AMTI a taxpayer's medical expenses are allowable deductions only to the extent that they exceed 10 percent of the taxpayer's AGI.
4 "Adjusted itemized deductions" were defined as the amount by which the sum of the taxpayer's itemized deductions (excluding state and local taxes, medical expenses, casualty losses, and the deduction allowable under section 691(c) of the Code) exceeded 60 percent of the taxpayer's adjusted gross income after the later was reduced by the amount of the excluded itemized deductions.
5 For taxable years beginning after December 31, 1978, and before January 1, 1983, non-corporate taxpayers were subject to the regular tax, MT, and AMT. The MT was treated as part of the regular tax in computing AMT liability.
6 By GAMT liability we mean the amount of the taxpayer's AMTI, less any applicable exemption amount, multiplied by the appropriate AMT tax rate(s), reduced by the AMT foreign tax credit.
7 It is interesting to note that in computing net "economic income" for the four year period beginning on January 1, 1985, and ending on December 31, 1988, Taxpayer has included a statutorily defined exemption amount. Although the term "economic income" standing alone is ambiguous, it is doubtful that any economic theorist would conclude that a statutorily defined exemption amount, which is not a cost to the taxpayer, should be taken into account in computing "economic income".
8 We also noted that the regular tax NOLs for 1986 and 1988 contained on the schedules attached to the submission and used in computing Taxpayer's ATNOLs for those years do not agree with the amount of NOLs for those years reported in the submission. The reasons for these discrepancies should be determined and any necessary adjustments to Taxpayer's l986 and 1988 ATNOLs should be made.
END OF FOOTNOTES
- Institutional AuthorsInternal Revenue Service
- Code Sections
- Index TermsAMTAMT, losses deniedAMT, rulesAMT, preference itemsAMT, adjustmentsNOL
- Jurisdictions
- LanguageEnglish
- Tax Analysts Electronic Citation1993 TNT 115-44