The answer depends upon whether the taxpayer purchased or acquired the repair
part itself or whether the repair part was provided by the repair person in
conjunction with and incidental to the repair person's provision of service.
"Purchases from other firms" is defined in part at MCL 208.1113(6) as:
(a) Inventory acquired during the tax year, including freight, shipping,
delivery, or engineering charges included in the original contract price for
that inventory.
(b) Assets, including the costs of fabrication and installation, acquired
during the tax year of a type that are, or under the internal revenue code
will become, eligible for depreciation, amortization, or accelerated capital
cost recovery for federal income tax purposes.
(c) To the extent not included in inventory or depreciable property,
materials and supplies, including repair parts and fuel.
If the taxpayer acquired (i.e. purchased) the repair part during the tax year
for use in operating or maintaining the taxpayer's assets under MCL
208.1113(6)(b), and hired a repair person who then used the repair part to
repair taxpayer's fixed assets under MCL 208.1113(6)(b), the repair part would
be considered "materials and supplies" under MCL 208.1113(6)(c) and thus a
"purchase from other firms" under MCL 208.1113.
To the contrary, where the taxpayer retained the services of the repair person,
pursuant to which the repair person used the repair part incidental to the
provision of services to the taxpayer, then the repair part would not be
"materials and supplies" under MCL 208.1113(6)(c) and, thus, would not be a
"purchase from other firms" under MCL 208.1113(6). In this situation, the
taxpayer did not "acquire" the repair part; rather, the repair part was merely
tangible property provided in connection with and incidental to the provision of
repair services to taxpayer, the cost of which is not a "purchase from other
firms." However, if the repair person were to separately itemize and charge the
taxpayer for the repair part used in conjunction with the repair service, the
repair part would then be considered as having been acquired by taxpayer as a
repair part for use in operating or maintaining the taxpayer's assets under MCL
208.1113(6)(b), and thus constitute a "purchase from other firm" under MCL
208.1113(6).
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