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The conferees wish to clarify the general binding
contract rule with respect to investment credit * * *.
Design changes to a binding contract to construct a
project that are made for reasons of technical or
economic efficiencies of operation and that cause an
insignificant increase in the original price will not
constitute substantial modifications of the contract so
as to affect the status of the project under the
binding contract rule. * * *
The conferees also wish to clarify that the
general binding contract rule does not apply to supply
agreements with manufacturers, where such contracts
fail to specify the amount or design specifications of
property to be purchased; such contracts are not to be
treated as binding contracts until purchase orders are
actually placed. A purchase order for a specific
number of properties, based on the pricing provisions
of the supply agreement, will be treated as a binding
contract.
H. Conf. Rept. 99-841 (Vol. II), supra at II-54 to II-56, 1986-3
C.B. (Vol. 4) at 54-56.
1. Nuclear Fuel Transfer System
Petitioner seeks an ITC for the nuclear fuel transfer system
purchased from Stearns Catalytic. This equipment was placed in
service during the 1988 and 1990 taxable years with tax bases of
$241,469 and $233,742, respectively. In support of its position,
petitioner submitted copies of two purchase orders, its ERs and
BIs, and the testimony of its employee. Respondent argues that
petitioner failed to produce the required written contract.
We agree with respondent that a purchase order is not, by
itself, a contract. Indeed, a purchase order is typically an
offer. See, e.g., Philip Schwartz, Inc. v. Gold Coast Graphics,
Inc., 623 So. 2d 819 (Fla. Ct. App. 1993). Performance
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