L.L. Bean, Inc., Leon Gorman, Tax Matters Person - Page 19

                                       - 19 -                                         
               Petitioner claimed an ITC for the cost of the Mezzanine                
          System on its 1986 return.  The ITC, totaling $169,706, was based           
          upon $1,697,061.80 in costs associated with the components of the           
          Mezzanine System.8  Respondent disallowed this ITC in the amount            
          of $60,985 with respect to $609,852.79 of these costs.  In                  
          addition, petitioner claimed a deduction on its 1986 and 1987               
          returns for depreciation on the entire cost of the Mezzanine                
          System 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 Mezzanine System.  None of this interest was            
          capitalized under section 189 by petitioner.                                

                                       OPINION                                        

               The issue for consideration is whether petitioner is                   
          entitled to ITC's under section 38 with respect to the costs of             
          the Reserve Facility and the Mezzanine System to an extent                  



          8Petitioner claimed an ITC on a Mezzanine System consisting                 
          of the following items:  (1) Ground-level storage racks and                 
          cantilever shelving; (2) a horizontal steel structure joined to             
          and mounted on the top of the ground-level racks; (3) plywood               
          decking placed upon the horizontal structure that creates the               
          mezzanine level; (4) additional racks and shelving rising from              
          the mezzanine decking to a height of approximately 6 feet; (5)              
          additional columns and beams; (6) four one-piece stairway units             
          connecting the first floor to the mezzanine; and (7) lightweight            
          rolled steel frames that support the plywood decking and framing            
          at the northwest and southeast corners along the periphery of the           
          Mezzanine System where there are no ground-level racks.                     




Page:  Previous  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  Next

Last modified: May 25, 2011