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We agree with respondent that the purchase of
property/equipment for which petitioner seeks ITCs was not the
subject matter of the interchange contract or the amended power
agreement; accordingly, petitioner is not entitled to an ITC.
3. LMS Equipment Under A.B. Chance Contract
Petitioner argues that FPL acquired the LMS equipment
(substation equipment and transponders)111 “pursuant to a written
contract with A.B. Chance, and that contract was binding on
December 31, 1985.” Petitioner seeks ITCs for the LMS
property/equipment placed in service during the 1988, 1989, and
1990 taxable years with tax bases of $362,837, $16,045,190, and
$39,351,031, respectively. Respondent argues that “No contract
existed between A.B. Chance (or anyone else) and FPL regarding
Phase II and III prior to January 1, 1986.” Additionally,
respondent argues that, even if there was a contract, it was not
binding because FPL could terminate the contract for convenience.
To resolve this issue, we must examine the A.B. Chance
contract to determine whether it is a TRA section 203(b)(1)(A)
binding contract. In October 1985, both parties executed the
“General Conditions” section of the A.B. Chance contract. As
found above, the contract incorporates and includes a copy of
111 “Petitioner limited its ITC claim strictly to the
substation control equipment and the transponders acquired during
the Periods in Issue because the computer equipment has a five-
year class life.”
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