- 15 -
On its 1986 return, petitioner claimed an ITC for the costs
of the entire Reserve Facility. The ITC, totaling $698,068, was
based upon $6,980,676 in costs. Respondent disallowed $513,179
of the ITC with respect to $5,131,785.28 of these costs.
Petitioner also claimed an ITC of $26,710 with respect to
$267,102.37 in additional costs associated with the Reserve
Facility on its 1987 return. Respondent disallowed $19,622 of
this ITC. In addition, petitioner claimed a deduction on its
1986 and 1987 returns for depreciation on the entire cost of the
Reserve Facility based upon the accelerated 5-year useful life
method under section 168(b)(1). Petitioner also claimed on its
1986 return an interest expense deduction for all interest
accrued during the construction of the Reserve Facility. None of
this interest was capitalized under section 189 by petitioner.
Mezzanine System
The Mezzanine System consists primarily of lower level racks
approximately 9 feet 6 inches high and a horizontal steel
structure with plywood decking on top of the racks which creates
an intermediate level between the two floors of petitioner's 1986
Shipping Building. Petitioner began construction of the
Mezzanine System in 1985 and placed it in service in 1986 when
construction was completed.
The design and the engineering for the 1986 Shipping
Building were prepared by the architectural firm of Symmes, Maini
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011