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Commissioner v. Idaho Power Co.

United States Supreme Court
418 U.S. 1 (1974)


The value of equipment owned by Idaho Power Company (IPC) (plaintiff) depreciated through the equipment’s use in daily operations and maintenance and in the construction of IPC’s capital improvements. Under § 167(a) of the federal tax code, the equipment’s operations- and maintenance-related depreciation entitled IPC to a business-expense tax deduction from IPC’s current gross income. IPC also claimed a § 167(a) deduction for its capital-construction-related equipment depreciation. The commissioner of internal revenue (defendant) denied IPC’s capital-construction-related depreciation deduction because the depreciation was a capital expenditure, which § 263(a)(1) of the tax code required to be computed over the useful life (30 years or more) of IPC’s new capital facilities. IPC petitioned the United States Tax Court for a redetermination. The tax court found for the commissioner, and the court of appeals reversed in favor of IPC. The United States Supreme Court granted certiorari.

Rule of Law


Holding and Reasoning (Blackmun, J.)

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