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Taxable Year Deficiency
1992 $123,999
1993 300,475
1995 306,346
1996 1,228,868
The issues remaining for decision are:
(1) Should the Court sustain respondent’s determination that
the expenditures at issue must be capitalized under section
263(a)?1 We hold that the Court should.
(2) Should the Court sustain respondent’s determination that
the period over which the expenditures at issue must be amortized
and deducted is the term of certain identical modified sale and
leaseback agreements beginning with taxable year 1995 and ending
with taxable year 2020? We hold that the Court should.
FINDINGS OF FACT
Most of the facts have been stipulated and are so found.
Petitioner had its principal office in Bismarck, North
Dakota, at the time it filed the petition in this case.
During the years at issue, petitioner’s principal business
was the generation and transmission of electrical power to its
member rural electrical systems located in an eight-State region
of the upper Midwest. During the late-1970s through the mid-
1980s, petitioner constructed new electrical power generating and
1All section references are to the Internal Revenue Code in
effect for the years at issue. All Rule references are to the
Tax Court Rules of Practice and Procedure.
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Last modified: May 25, 2011