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out" the Livonia Franchise Agreement. In the existing record,
there is inadequate identification of the items of property that
were actually placed in service during the audit years. Even if
we were to assume that all such items of property fit within the
general categories listed in petitioner’s charts of account, it
is possible that "business considerations", not the franchise
agreement, led to the installation of one or more items. If, for
example, any of such items exceeded the performance capabilities
called for by the franchise agreement, they would not have been
placed in service pursuant to a specific contractual commitment.
In addition, it is not clear what portion, if any, of the
property consisting of "updated versions" of equipment
illustrated in MetroVision’s application may have qualified for
transition ITC.10 That all such items may have been installed to
10 One justification for such upgrades is the requirement, in
the Livonia Franchise Agreement, to construct and maintain the
Livonia cable system "at a state-of-the-art level in accordance
with applicable requirements and specifications of the National
Electrical Code, the rules and regulations of the [FCC], and all
other pertinent ordinances and codes of [the City of Livonia]."
That state-of-the-art requirement, together with a specific
definition in the franchise agreement of the term "state-of-the-
art equipment", and the requirement that MetroVision "meet or
exceed * * * the material construction and service requirements"
of its franchise application may provide the objective touchstone
that was lacking in Southern Multi-Media Communications, Inc. v.
Commissioner, 113 T.C. 412, 414 (1999), where the franchise
agreements required the cable systems to be maintained "in
accordance with the highest accepted standards of the industry to
the end that the subscriber may receive the highest and most
desirable form of service." Depending upon the nature and extent
of the upgrades in this case, it is possible that one or more was
needed to satisfy what we consider to be an explicitly defined
state-of-the-art contractual requirement in the Livonia Franchise
(continued...)
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