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currently deducted. See Armco, Inc. v. Commissioner, 88 T.C.
946, 949 (1987); sec. 1.167(a)-11(a)(1), Income Tax Regs. By
electing the PRA, the taxpayer may automatically deduct up to a
set percentage of all expenditures for repair, maintenance,
rehabilitation, or improvement of “repair allowance property” for
the taxable year, as long as such expenditures are not considered
“excluded additions”. Sec. 1.167(a)-11(d)(2), Income Tax Regs.
Expenditures in excess of the set percentage must be capitalized.
See id. “Under * * * [the PRA] system, certain expenditures
which typically would be capitalized can be treated as repair
allowances and, thus, deducted as expenses.” United States v.
Wisconsin Power & Light Co., 38 F.3d 329, 331 (7th Cir. 1994).
For the years 1988 to 1991, respondent claims that
petitioner’s repair deductions for tax purposes consisted of the
amounts deducted for book purposes, plus Schedules M-1
adjustments for the PRA as follows:
Year Book Account M-1 Adjustment Tax Return
1988 $372,757,769 $28,501,471 $401,259,240
1989 385,472,395 29,315,281 414,839,472
1990 408,077,080 28,635,238 436,688,025
1991 405,017,292 25,806,865 430,814,717
Petitioner does not dispute respondent’s figures, or allege that
there were Schedules M-1 adjustments for any other items for 1988
to 1991.
The PRA is a specific tax only provision. Florida Power did
not have the option of using the PRA to determine the
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