The airlines have been negotiating an industry-wide settlement with the US Treasury on the issue when costs of standard maintenance on aircraft engines must be “capitalized” and recovered over the remaining life of the engines. The airlines want to deduct the costs immediately like other repairs. Power companies have the same issue. In what may be a bad sign, United Airlines filed suit in the US tax court in October.
The airline is contesting whether $118 million in maintenance costs in 1988 for so-called “heavy maintenance visits” or “mid-period visits” by its aircraft can be deducted . . . . Boston Edison argues in a suit it filed recently in US district court in Massachusetts that it was entitled to claim investment tax credits on additions to its Pilgrim nuclear power plant, in the late 1980’s after the investment credit was repealed, under a transition rule for “service or supply contracts.” The utility argued that it had to make the improvements to the nuclear plant because of contracts it had signed to supply power to local municipalities.