Opinion ID: 677814
Heading Depth: 2
Heading Rank: 2

Heading: AMT Liability.

Text: 30 Resolution of the AMT issue follows along the same lines. As discussed above, the IRS challenged Chugach's ability to retain some of the income assigned to it under the 1987 income sharing Agreement with WMI in order to eliminate its AMT. The IRS reasons that Sec. 60(b)(5) was not designed to exempt [Native Corporations] from payment of AMT. Blue Brief at 27. This is true, as far as it goes, but it misses Chugach's point. Chugach concedes that it is not exempt from the AMT. It merely desires to be able to make use of its NOLs in its tax sharing agreement in such a fashion as to minimize its AMT. 31 Chugach argues that the IRS's position on the AMT issue denies it the benefit or use of its losses, in contravention of the plain meaning of DEFRA 1984 Sec. 60(b)(5), which authorizes Native Corporations to make use of and derive benefit from their tax losses. The IRS response scrupulously avoids any discussion of the plain meaning of the statute. Instead, it argues that Chugach's position is patently illogical, because Chugach's taxes will actually be lower if the IRS prevails. 10 0] It is true that under the peculiar circumstances of this case, and of Chugach's 1987 Agreement sharing income with WMI, Chugach will derive a greater benefit from a higher regular tax than from a lower one. But Chugach's position is neither illogical nor illegal. Nothing in the tax code or anywhere else forbade it from structuring its affiliations with other companies so as to minimize its AMT as well as or even instead of its regular tax. As the district court pointed out, Sec. 60(b)(5) does not distinguish between these two types of taxes. 32 Nor are the benefits that may permissibly be derived from such affiliations limited to tax benefits, as implied by the IRS in its briefs. See Blue Brief at 29 (Section 60(b)(5) was not a device through which [Native Corporations] could maximize their benefits under private agreements). Rather, private agreements and payments to the Native Corporations were the primary benefit intended by Sec. 60(b)(5). See June, 1986 Statement of Sen. Stevens (explaining that the purpose of the 1986 amendment to Sec. 60(b)(5) was to allow Native Corporations to receive an infusion of capital from profitable companies who, in turn, would receive tax savings from the Native Corporation NOLs). 33 Thus, not only is Chugach's reading of the statute consistent with its language, it also comports with its primary purpose, which was to allow Native Corporations, such as Chugach, to structure deals with other companies so as to derive benefit from their NOLs. Section 60(b)(5) therefore permits Native Corporations to form affiliations to benefit from their NOLs. Requiring Chugach to structure its affiliation with WMI so as to incur AMT liability is inconsistent with this purpose. 11 34 AFFIRMED.