Page:United States Statutes at Large Volume 100 Part 3.djvu/521

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2329

"(B) EARNINGS AND PROFITS USED IN CERTAIN CASES.—If—

"(i) a taxpayer has no applicable financial statement, or "(ii) a taxpayer has only a statement described in subparagraph (A)(iv) and the taxpayer elects the application of this subparagraph, the net income or loss set forth on the taxpayer's applicable financial statement shall, for purposes of paragraph (3)(A), be treated as being equal to the taxpayer's earnings and profits for the taxable year (without diminution by reason of distributions during the tax year). Such election, once made, shall remain in effect for any taxable year for which the taxpayer is described in this subparagraph unless revoked with the consent of the Secretary. "(C) SPECIAL RULE WHERE MORE THAN i STATEMENT.—For

purposes of subparagraph (A), if a taxpayer has a statement described in more than 1 clause or subclause, the applicable financial statement shall be the statement described in the clause or subclause with the lowest number designation. "(4) EXCEPTION FOR CERTAIN CORPORATIONS.—This subsection shall not apply to any S corporation, regulated investment company, real estate investment trust, or HEMIC. Xg) ADJUSTMENTS BASED ON ADJUSTED CURRENT EARNINGS.—

"(1) IN GENERAL.—The alternative minimum taxable income of any corporation for any taxable year beginning after 1989 shall be increased by 75 percent of the excess (if any) of— "(A) the adjusted current earnings of the corporation, over "(B) the alternative minimum taxable income (determined without regard to this subsection and the alternative tax net operating loss deduction). "(2) ALLOWANCE OF NEGATIVE ADJUSTMENTS.—

"(A) IN GENERAL.—The alternative minimum taxable income for any corporation of any taxable year beginning after 1989, shall be reduced by 75 percent of the excess (if any) of^ "(i) the amount referred to in subparagraph (B) of paragraph (1), over "(ii) the amount referred to in subparagraph (A) of paragraph (1). "(B) LIMITATION.—The reduction under subparagraph (A) for any taxable year shall not exceed the excess (if any) of— "(i) the aggregate increases in alternative minimum taxable income under paragraph (1) for prior taxable years, over "(ii) the aggregate reductions under subparagraph (A) of this paragraph for prior taxable years. "(3) ADJUSTED CURRENT EARNINGS.—For purposes of this subsection, the term 'adjusted current earnings' means the alternative minimum taxable income for the taxable year— "(A) determined with the adjustments provided in paragraph (4), and "(B) determined without regard to this subsection and the alternative tax net operating loss deduction. "(4) ADJUSTMENTS.—In determining adjusted current earnings, the following adjustments shall apply: "(A) DEPRECIATION.—

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