Michael Johnson, et al., 160 TC No. 2 (Jan. 25, 2023)
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EECB Deduction Allowed (Michael Johnson, et al., 160 TC No. 2 (Jan. 25, 2023))
Michael Johnston, et al, in this consolidated case are shareholders in an S corporation, Edwards Engineering (Edwards). Edwards was hired by a Veterans Administration hospital to supply and install components of the federal building’s HVAC system. Edwards analyzed existing technical programming specifications, modified them as necessary, and then programmed the modified specifications into new, installed components. Upon Edwards’ request, the VA building’s chief maintenance officer signed a letter that agreed, pursuant to §179D(d)(4), to allocate to Edwards the full amount of the §179D deduction to which the VA would otherwise be entitled for the installation of the property.
Although Edwards claimed a deduction of that included the cost of EECB property installed by the VA over multiple years (and by other contractors), the court limited the deduction to the amount of EECB property installed during 2013, the year that the VA placed the property in service.