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committed or incurred by December 31, 1985, the lesser of $1
million or 5 percent of the cost of property consisting of the
“wrap up” work and “enhancements and deficiencies” work and
therefore does not meet the requirements of TRA section
203(b)(1)(B).
TRA section 203(b)(1)(B) also requires that a taxpayer had
to begin construction of the property for which it seeks an ITC
by December 31, 1985. The conference report clarifies when
construction begins for purposes of TRA section 203(b)(1)(B).
Construction of a facility or equipment begins when “physical
work of a significant nature starts.” H. Conf. Rept. 99-841
(Vol. II), supra at II-56, 1986-3 C.B. (Vol. 4) at 56. “Physical
work does not include preliminary activities such as planning or
designing, * * * researching, or developing.” Id. When the
property at issue is a building, “‘property’ includes all of the
normal and customary components that are purchased from others
and installed without significant modification”. Id. As we have
previously held, petitioner cannot meet this requirement by
treating the “wrap up” work and “enhancements and deficiencies”
work as one property with Unit 1 and the common facilities at
SJRPP.
Mr. Reid testified that “ER4110 was the ER that was opened
as the wrap ER * * * to do the remaining construction items under
unit 1 and common [facility].” This ER was first authorized on
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