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1986, the repeal of the investment tax credit was necessarily
retroactive.
Several transition rules were provided that preserve the
investment tax credit for the costs of transition property placed
in service after December 31, 1985, and before January 1, 1991,
as long as the contracts relating to the costs of the property
were entered into on or before December 31, 1985. See TRA 1986
sec. 204(a), 100 Stat. 2146, as amended by TRA 1986 sec. 211, 100
Stat. 2167 (adding Code sec. 49(e)(1)(B)). To qualify for the
transition rules under section 204(a), transition property with a
class life of 20 years or more must be placed in service before
January 1, 1991. See TRA 1986 sec. 203(b)(2)(A), 100 Stat. 2144.
Section 204(a)(3) of TRA 1986 provides the transition rule
for supply and service contracts. TRA 1986 sec. 204(a)(3), 100
Stat. 2149. As modified, section 204(a)(3) of TRA 1986 states:
(3) Supply or service contract.–-The amendments
made by section 201 shall not apply to any property
which is readily identifiable with and necessary to
carry out a written supply or service contract, or
agreement to lease, which was binding on * * *
[December 31, 1985]. [Emphasis added.]
The parties have stipulated that the power contracts and
amendments as of December 31, 1985, qualify as binding written
supply or service contracts under section 204(a) of TRA 1986.
They disagree about whether the fuel assemblies installed in 1990
qualify under the transition rule of section 204(a)(3) of TRA
1986.
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Last modified: May 25, 2011