- 153 -
203(b)(1)(B). For example, in order to qualify under TRA section
203(b)(1)(B), a taxpayer must establish the identity of “the
property” in order to meet the requirements that it incurred or
committed a sufficient amount of the cost of such property by
December 31, 1985, and that construction of “such property” began
by December 31, 1985.
In determining whether components constituted a single
property for purposes of the safe-harbor leasing rule, courts
have examined the meaning of property in other contexts of the
Internal Revenue Code, including the ITC. See Armstrong World
Indus., Inc. v. Commissioner, 974 F.2d 422 (3d Cir. 1992)
(citing, inter alia, Haw. Indep. Refinery, Inc. v. United States,
697 F.2d 1063 (Fed. Cir. 1983), affg. 49 AFTR 2d 675, 82-1 USTC
par. 9183 (Ct. Cl. Trial Div. 1982), and Consumers Power Co. v.
Commissioner, supra), affg. T.C. Memo. 1991-326.
In sum, courts appear to agree that individual
components will be considered a single property for tax
purposes when the component parts are functionally
interdependent--when each component is essential to the
operation of the project as a whole and cannot be used
separately to any effect. The converse, thus, should
be equally valid in this case. Accordingly, if a
project has component parts which can function as
planned in a wholly independent manner, then a court
may find that each component is a “property . . .
placed in a condition or state of readiness and
availability for a specifically assigned function.”
[Alteration in original.]
Id. at 434 (quoting Consumers Power Co. v. Commissioner, supra at
723). We interpret the single property requirement to mean that
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