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Wometco bears the burden of showing that it meets the
requirements of the supply or service transition rule and that it
is entitled to the tax credits sought. See Rule 142(a).
Wometco argues that the costs associated with the six
rebuilds and the line extensions in issue were readily
identifiable with, and necessary to carry out, its related
franchise agreements that were outstanding as of December 31,
1985. Wometco contends that the general language of the
franchise agreements that existed as of December 31, 1985,
requiring Wometco to maintain its cable television systems in a
state-of-the-art condition, is sufficient to qualify the six
rebuilds and the line extensions under the supply or service
transition rule.
Respondent argues that under Wometco's franchise agreements
Wometco was not expressly required to undertake particular
rebuilds or line extensions, that only 20-channel capacity
systems were generally required, that Wometco's systems already
met that requirement, and that as of December 31, 1985, the six
rebuilds and the line extensions were not necessary to carry out
and were not readily identifiable with Wometco's general
franchise agreements that existed on December 31, 1985.
The language of the supply or service transition rule
specifically used the words “necessary to carry out”. The word
“necessary” connotes essential, mandatory, indispensable, or
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