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reflected petitioner’s election to apply the percentage repair
allowance (PRA), a specific tax provision allowing petitioner to
deduct as repair expenses a set percentage of expenditures for
the repair, maintenance, rehabilitation, or improvement of
certain property. See sec. 1.167(a)-11(d)(2), Income Tax Regs.5
The Schedule M-1 adjustment for 1992 was for a storm reserve and
related to damages caused by Hurricane Andrew.6 Other than the
variations for the PRA and storm reserve, petitioner used the
same characterizations of expenditures for tax purposes that
Florida Power did for regulatory accounting and financial
reporting purposes.
For the taxable year 1992, petitioner filed two amended
returns with claims related to the characterization of
expenditures associated with Florida Power. In its first amended
return, filed in September of 1993, petitioner claimed additional
storm expenses of $412,042 and an additional repair expense
deduction of approximately $4.7 million for cable injection
5Respondent has alleged that the following amounts were
deducted as repair expenses under the PRA for the years 1988 to
1991:
Year Amount
1988 $28,501,471
1989 29,315,281
1990 28,635,238
1991 25,806,865
Petitioner has not disputed these amounts.
6The Schedule M-1 adjustment for the storm reserve was in
the amount of $6 million.
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