The average time for tax cases that US companies appeal after being told they owe more taxes on audit increased to 494 days in 2011 from 346 days in 2010. The IRS appeals staff is shorthanded . . . Three Mercury Solar customers lost cases in the US Tax Court in April. The facts of each case are similar. Each of the taxpayers bought a rooftop photovoltaic system or solar hot water heater for personal use and also bought a separate unit for investment that Mercury Solar installed on someone else’s house. Each taxpayer hired out the job of collecting monthly payments for the electricity or hot water produced from the investment unit. Each taxpayer used the money collected over time from the other homeowner to pay Mercury Solar the purchase price for the investment unit. Each taxpayer claimed depreciation and presumably also a 30% investment tax credit on the investment unit. The Tax Court denied the benefits in each case. Passive loss rules make it difficult for individuals to use such benefits. The benefits can only be used to shelter income from other passive investments. It appears Mercury may have a number of unhappy customers. The cases are Wilson v. Commissioner, Lum v. Commissioner and Uyemura v. Commissioner . . . A New York tax appeals tribunal said in March that a local gas distribution company cannot claim an investment tax credit on spending on new gas line improvements and other equipment because the credit can only be claimed on property used in manufacturing or processing. The tribunal said there was no processing, even though the gas company used heaters and purifiers on gas moving through its system. The tribunal said the gas company was merely moving gas. The gas company buys gas from interstate pipelines and supplies it to customers. The case is In Re: Brooklyn Union Gas Co. (Nos. 822692 and 822693).