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transportation contract. That use occurred between June and July
of 1981, when one of the tankers transported LNG from
Everett/Boston, Massachusetts, to Elba Island, Georgia. The LNG
being transported was originally from Algeria. For that
transportation, Lachmar received gross compensation of
$2,038,468, which resulted in a gross profit of $588,228. The
$2,038,468 was paid $1,349,581 in 1981 and $688,887 in 1982. Due
to the domestic use of one of the tankers, Lachmar obtained an
exception from the Federal Government; otherwise it would have
risked losing all of its Government subsidies. The two tankers
made voyages between Algeria and Louisiana a total of four times
during 1982 and seven times during 1983 under the transportation
contract. Thereafter, the LNG and transportation contracts were
breached, and the tankers were stored in Virginia until 1988 and
1989, at which time they no longer belonged to Lachmar and began
service transporting LNG in foreign commerce.
On Lachmar’s Federal partnership returns, for purposes of
claiming credits and depreciation allowances, Lachmar reported
that one of the tankers was placed in service in 1980 and the
other in 1981. Respondent questioned the placed-in-service dates
reported by Lachmar, and after the tax audit, the parties agreed
that one tanker was placed in service on January 1, 1981, and the
other on July 1, 1981.
OPINION
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