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b. Commencement of the Construction
Petitioner argues that it began construction of each
substation before December 31, 1985, and for each of the items at
issue, construction commenced on the same date as the underlying
substation. Respondent argues that construction did not begin
until after December 31, 1985, because the plant facility rule
requires that the equipment at these substations must be analyzed
separately from the original construction.
TRA section 203(b)(1)(C) requires that the construction of a
plant facility must have commenced as of December 31, 1985, to
qualify for relief from the ITC repeal. Further, TRA section
203(b)(4) defines the term “plant facility” as a “single
operating unit” and as a “single unitary project”.
In a prior repeal of the ITC, plant facility transitional
relief applied to each operating unit separately. In OKC Corp.
v. Commissioner, 82 T.C. 638, 658 (1984), this Court rejected the
taxpayer’s argument that the entire refinery, including the
alkylation unit, constituted a plant facility. In citing the
legislative history, the Court indicated that Congress rejected
this interpretation of a plant facility. The Court stated:
“‘the fact that a single operating unit or processing operation
is connected, by pipes, conveyor belts, etc., to one or more
other units or processing operations in an integrated processing
or manufacturing system does not cause the whole system to be a
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