Comm’r, T Sample Clauses

Comm’r, T. C. Memo. 1990-505 (1990); see also Consumers Power Co. v. Comm’r, 89 TC 710 (1987) (pumped-storage facility built, tested, synchronized and sold 4,447 MWH of electricity during 1972, but not in service until 1973 after accident in December 1972 forced one-month shut-down and resynchronization). The bar is higher for a taxpayer entering a new business than for a taxpayer already in that business. In the case of someone going into a new business, the courts have held that he must actually have put the equipment to use. It is not enough merely show it was capable of operating. See, e.g., Piggly Wiggly Southern, Inc. v. Comm’r, 84 TC 739 (1985) (refrigerators installed in new stores not in service until the stores opened to customers); compare General Counsel Memorandum 37449 (March 6, 1978) (taxpayer already in the trade or business does not have to use equipment before it is in service, unlike taxpayers entering a new business). If a project has started operations, but its production is so minimal that it is not operating in an economically-sustainable manner, it will not be considered in service. See, e.g., Valley Natural Fuels, T.C. Memo. 1991-341 (1991). In Valley Natural Fuels, the court determined that an ethanol plant was not in service until it produced fuel of a quality that had a viable market. Like in Sealy, revenue from ethanol sales were exceptionally low ($250 in 1983, $772 in 1984 and $920 in 1985). In this case, each project should be treated as a separate unit, and it should be considered in service when it reaches substantial completion under the relevant construction contract.3 3 We are assuming that no project company will attempt to elect to treat the project it is developing as part of any other Ivanpah project for cash grant purposes. Cash Grant Opinion - Ivanpah 21 April 5, 2011 Although the projects are on one site and use some common facilities, each project will operate independently. Each phase will be owned by a separate limited liability company and will sell power under a separate power contract. Also, the phases will not share interconnections. The power industry has traditionally treated large thermal power plants as in service when substantial completion is reached under the engineering, procurement and construction contract. In this case, all five tests to be considered in service are expected to be reached at substantial completion of each phase. Physical construction will have been complete since mechanical completion. Leg...