John Michael Hale and Amy J. Weller , legal intern, of Kansas Department of Revenue, for appellant. Derrick L. Roberson and Shon C. Robben , of Arthur-Green, LLP, of Manhattan, for appellee. BOTA concluded that a major component should be determined by the importance of the component and its purpose in the production or manufacturing process. The KDR asserts that a major component ought to be considered as such only after the taxpayer designates the component as a capital expenditure. Alsop operates sand dredging operations.
Sand is a natural abrasive.
Alsop expensed all of the above expenditures and did not capitalize any. The ALJ upheld the KDR's assessments. The distinction may be easy to apply, but it does not appear in law. In this case, the components are parts of the machinery used to produce the sand. Without these particular items on the processing machinery the process would grind to a halt.