NavList:

Well, yes it does happen. The measured altitude with the sextant using the sea horizon will be 90° 55.7'. That is the sextant altitude, Hs. So when using this sight you then apply the normal corrections, any index error, IC, and then subtract the dip of 55.7'  to produce the Ha of 90°. You then apply refraction correction which is zero for an observation of 90°. You then apply semidiameter of 16' (plus for a lower llimb observation)  so the observed altitude is, indeed, 90° 16'. If it was an upper limb then the Ho would have been 89° 44'. If this doesn't make sense to you, the limb is directly above you and 90° from the horizontal and the center of the sun is displaced 16' from the limb so 90° 16' from the horizon in one direction. Or you could turn around and take the observation from the opposite horizon and measure from there.  

gl