Tax Court ruling allows an Engineering Company to take deduction in an unusual case

Recently, the Tax Court ruled that an engineering company that installs energy efficient commercial building property (EECBP) qualified for a deduction. The company asserted it was entitled to a Sec. 179 deduction for the cost of installing EECBP in a Veterans Affairs (VA) hospital. In the absence of Congressional regulations, the court found that the installed property qualified under Code Sec. 179D(c)(1). Also, because the VA hospital is a government entity that doesn’t benefit from tax deductions, it’s allowed to allocate the deduction to the entity “responsible for designing the property in lieu of the owner of such property.” It allocated the full deduction to the engineering company.