FPL Group, Inc. and Subsidiaries - Page 4

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          expenses on petitioner’s returns for the years in issue was                 
          required to be capitalized.  Petitioner also relies on the fact             
          that, during the examination, it filed a claim for approximately            
          $21 million in additional repair expenses for the year 1992 of              
          which respondent’s agents allowed approximately $10.9 million as            
          additional repair expenses.                                                 
               Respondent has never notified petitioner that he was                   
          changing petitioner’s method of accounting, and respondent denies           
          that any of the aforementioned actions taken during the                     
          examination had that effect.  Indeed, in petitioner’s memorandum            
          in opposition to respondent’s previous motion for partial summary           
          judgment, which we granted, petitioner stated:                              
               When seeking to capitalize repair expenses deducted by                 
               Petitioner, at no time did Respondent assert that he                   
               was changing Petitioner’s method of accounting or that                 
               he had determined that Petitioner’s method did not                     
               clearly reflect income as required under Section 446 of                
               the Code in order to require such a change.  * * *                     
          In its reply brief to respondent’s previous motion, petitioner              
          also stated:  “At no time did Respondent’s agents propose a                 
          ‘change in method of accounting’ when proposing to disallow                 
          repair expense for tax purposes”.                                           
               In its memorandum in opposition to respondent’s previous               
          motion for partial summary judgment, petitioner claimed that it             
          was using the “method of accounting” required by section 1.162-4,           
          Income Tax Regs., and that the amounts classified as repair                 
          expenses for FERC/FPSC regulatory and financial reporting                   





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