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requirements of the FERC and the FPSC were not its method of
accounting for purposes of determining the characterization of
expenditures at Florida Power’s electric plants. In classifying
expenditures as capital expenditures or repair expenses for tax
purposes, petitioner claims that it used the amount of repair
expenses determined for regulatory accounting and financial
reporting purposes as a “reasonable approximation” of the amount
of repair expenses allowable for tax purposes. From there,
petitioner claims that it made certain adjustments to increase
the deductible repair amount for tax purposes when it became
aware that certain expenditures were erroneously classified as
capital expenditures. Petitioner also claims that the
recharacterization is a mere “correction” which does not
constitute a change in accounting method. Finally, petitioner
implies that respondent’s failure to raise the change in
accounting method argument when petitioner claimed the additional
repair expense deduction for 1992 should prevent respondent from
now challenging petitioner’s attempted recharacterization.
7(...continued)
the taxpayer’s plant, equipment, or other property, as
the case may be, is not increased by the amount of such
expenditures. Repairs in the nature of replacements,
to the extent that they arrest deterioration, and
appreciably prolong the life of the property, shall
either be capitalized and depreciated in accordance
with section 167 or charged against the depreciation
reserve if such an account is kept.
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