Oglethorpe Power Corp. v. Commissioner

Oglethorpe Power Corp. v. Commissioner

Opinion

MEMORANDUM FINDINGS OF FACT AND OPINION

In these consolidated cases respondent determined deficiencies in and additions to the Federal income taxes of petitioners as follows:

Oglethorp Power Corporation

Taxable Year

Additions to Tax

Ended

Deficiency

Sec. 6653(b) ²

Sec. 6653(b)(1)

Sec. 6653(b)(2)

Dec. 31, 1980

$  4,808,910

$ 2,404,455

Dec. 31, 1981

3,787,752

1,893,876

Dec. 31, 1982

11,112,718

$  5,556,359

³ 

Dec. 31, 1983

1,216,889

10,608,445

Rollins, Inc. & Subsidiaries

Taxable Year Ended

Deficiency

June 30, 1979

$ 13,725,643

June 30, 1980

560,406

June 30, 1982

8,370,693

June 30, 1983

9,971,412

National Service Industries, Inc.

Taxable Year Ended

Deficiency

August 31, 1976

$    244,507

August 31, 1979

13,536,008

August 31, 1980

2,440,859

August 31, 1982

24,754,379

August 31, 1983

17,938,968

August 31, 1984

17,077,739

The controversy presently before us involves Plant Scherer Unit One, a large coal-fired electrical generating plant which was the subject of safe harbor leases entered into between petitioner Oglethorpe Power Corporation and petitioners Rollins, Inc., and National Service Industries, Inc. By agreement of the parties and pursuant to the Court's Order of April 16, 1990, the trial held from May 14 through May 17, 1990, was limited to a single issue: The date on which Plant Scherer Unit One was placed in service. A decision as to that date directly affects the validity of the safe harbor leases under section 168(f)(8), which were executed by petitioners on April 9, 1982, for the purpose of transferring the tax benefits attributable to Oglethorpe's [*4]  60-percent ownership interest to Rollins, Inc., and National Service Industries, Inc. For property to be deemed "qualified leased property" under the provisions of section 168(f)(8)(D)(ii), it must have been leased within 3 months after such property was placed in service. Thus the critical issue we must decide is whether Plant Scherer Unit One was placed in service on March 19, 1982, as petitioners contend, or on November 28, 1981, as respondent contends. A substantial number of related issues will depend upon the resolution of the "placed in service" issue.

FINDINGS OF FACT

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