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parties * * * against one or both of the Co-owners and
arising out of or resulting from the acquisition of the
Joint Facilities or any part thereof, the planning,
engineering, design, licensing, procurement,
construction, installation or completion of the Joint
Facilities * * * shall be considered a Cost of
Construction, Cost of Plant or Cost of Operation, as
appropriate.
We agree with respondent that the subject matter of the
joint agreement was not for the construction of property. As we
discussed earlier, in Katerelos v. Commissioner, T.C. Memo. 1996-
340, this Court found that the taxpayers were not entitled to an
ITC for equipment used in a leased premises because the subject
matter of the lease was the use of the premises, not the purchase
of the equipment. Here, we think that the parties entered into
the joint agreement to create a joint venture between FPL and the
JEA, and to define the relationship of the coowners.
We do not think that the title of this agreement, which
includes the construction of the SJRPP, defines the subject
matter of the contract; instead, we look at the terms of the
contract. The recitals indicate that “the parties desire to
provide for the construction and operation of Coal Units 1 and 2
by JEA and FPL in accordance with this Agreement”. This explains
the parties’ intentions or the expected plan for the joint
venture. We do not think that this statement shows that the
subject matter of the contract is the construction of the SJRPP.
While the purpose of the joint venture is to operate the
SJRPP, the terms of the joint agreement do not provide for the
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