115 T.C. No. 38
UNITED STATES TAX COURT
FPL GROUP, INC. AND SUBSIDIARIES, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 5271-96. Filed December 13, 2000.
F, a regulated electric utility, is a wholly owned
subsidiary of P. F is required to follow prescribed
regulatory rules for regulatory accounting and
financial reporting purposes. In preparing its
consolidated tax returns for the years in issue, P
characterized F’s expenditures by using the same
characterization that F used for regulatory accounting
and financial reporting purposes. In an amended
petition, P sought to recharacterize as repair
expenses, expenditures which it had characterized as
capital expenditures for tax purposes.
Held: P’s method of accounting for tax reporting
purposes was to characterize the expenditures in issue
consistently with the method that F used for regulatory
accounting and financial reporting purposes. By
seeking to alter the method which it used to
characterize expenditures, P is attempting to change
its method of accounting. P has failed to obtain the
consent of the Secretary to change its method of
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