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With respect to the requirement of the supply or service
transition rule that property be “necessary” to carry out a
written supply or service contract, petitioner argues:
Expenditures incurred by a cable operator acquiring
property placed in service to provide cable television
service under the terms of a cable television franchise
agreement are normal, appropriate expenses and hence
‘necessary’ as that term is understood in the context
of business expenditures.
In support of that argument, petitioner cites Commissioner v.
Heininger, 320 U.S. 467 (1943), and Carbine v. Commissioner,
83 T.C. 356 (1984), affd. 777 F.2d 662 (11th Cir. 1985), cases
dealing with the requirement that business or profit seeking
related expenses be “ordinary and necessary”. Secs. 162(a), 212.
Petitioner relies on Messrs. Bjorklund’s and Kearse’s affidavits
to establish that the expenses in question are normal and
appropriate expenses to provide cable television service.
2. Respondent’s Arguments
In support of respondent’s motion, respondent argues that
property is "readily identifiable with and necessary to carry out
a written supply or service contract" only if it is "specifically
described" in the contract and/or related (pre-1986) documents.
Respondent argues that, because the subject property was not
"mentioned, described, referred to, particularized, or identified
in any way * * * as to quantity, description, cost, vendor, model
number, purpose or any other characteristics" in either the
contract or in any pre-1986 related document, such property
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