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that the property purchased and installed thereunder was readily
identifiable with and necessary to those contracts. The
equipment was placed in service during the 1988, 1989, and 1990
taxable years with tax bases of $39,605,571, $2,648,789, and
$1,169,866, respectively. Respondent argues that the Southern
company contracts are not TRA section 204(a)(3) contracts because
FPL was not supplying anything under those agreements. Indeed,
respondent argues that FPL contracted for the purchase of
electricity and FPL’s counterparties were obligated to supply
electricity. For support of his interpretation, respondent cites
the House Ways and Means Committee report, which explains:
An example of a case to which * * * [the supply or
service contract rule] would apply is that of a
taxpayer who entered into a written binding power sales
contract before September 26, 1985, and is required to
construct (or have constructed) two facilities that
will produce the power necessary to fulfill a
contractual obligation. * * *
H. Conf. Rept. 99-426, at 165 (1985), 1986-3 C.B. (Vol. 2) 1,
165. Furthermore, respondent contends that the property and
equipment purchased and installed by FPL was not readily
identifiable in the Southern company contracts.
We disagree with respondent’s interpretation that only the
“supplier” under a supply contract is entitled to transition
relief. TRA section 204(a)(3) provides:
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