675 F2d 113 Smc Corporation v. United States

675 F.2d 113

82-1 USTC P 9309

SMC CORPORATION, Plaintiff-Appellee,
UNITED STATES of America, Defendant-Appellant.

No. 80-5373.

United States Court of Appeals,
Sixth Circuit.

Argued March 1, 1982.
Decided April 7, 1982.

John H. Cary, U. S. Atty., Chattanooga, Tenn., John F. Murray, Acting Asst. Atty. Gen., M. Carr Ferguson (Lead Counsel), Michael L. Paup, Asst. Attys. Gen., Ann Belanger Durney, Daniel F. Ross, Ernest Brown, Tax Division-Dept. of Justice, Washington, D. C., for defendant-appellant.

R. Wayne Peters, Charles J. Gearhiser, Gearhiser & Peters, Chattanooga, Tenn., for plaintiff-appellee.

Before EDWARDS, Chief Circuit Judge, KENNEDY, Circuit Judge and MARKEY,* Chief Judge, United States Court of Customs and Patent Appeals.


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This income tax case was heard and decided upon stipulated facts as follows. The question at issue was were the shredder and crane "placed in service" prior to the close of plaintiff's fiscal year ending July 31, 1975, within the meaning of 46(c)(1) of the Internal Revenue Code of 1954 and Treasury Regulation § 1.167(a)(10)(b).


The District Court decided this question in reliance on Sears Oil Co. v. Commissioner, 359 F.2d 191 (2nd Cir. 1966). In that case a barge had been delivered to the taxpayer but not actually put into use until the end of the tax year because the barge was frozen into a canal. The Second Circuit disagreed with the Tax Court primarily because it found it appropriate "to reflect the gradual deterioration of the completed asset that was taking place during this period."


In our instant case, the government has stipulated that both pieces of equipment herein involved were fully operational except for the connection of electric power lines by Georgia Power Company. The only impediment to the operation of this equipment was outside the control of the taxpayer. We affirm the decision of the District Court under which plaintiff SMC Corp. is allowed recovery of the sum of $147,371 with interest computed pursuant to the applicable provisions of the Internal Revenue Code.


The Honorable Howard T. Markey, Chief Judge, United States Court of Customs and Patent Appeal, sitting by designation