my company has a fairly expensive piece of equipment that has been "in
the shop" for almost 2 years.  How would we express this loss of use
from a tax perspective?

First, the equipment should probobly be considered as capital
equipment, which means that you should have been depreciating the
equipment since you bought it.  See: Internal Revenue Code Section
1221 (for definitions of capital equipment) and Sections 266 and 263A
(for depreciation rules) at http://www.fourmilab.ch/ustax/ustax.html. 
To determine how to depreciate the equipment see IRC Section 168.

Second, if you are no longer able to use the equipment you can take a
capital loss to the extent that you have capital gains for the year. 
See Section 1211(a).  If the value of the lost equipment is more than
your capital gains for the year you can (1) carry back those losses
for three years and then (2) carry forward those losses for five
years. See Section 1212(a)(1).

-Example:  
-Depreciated (2005) Value of Equipment:  $100
-Capital Gains for 2005:  $20
-Capital Gains for 2004:  $15
-Capital Gains for 2003:  $15
-Capital Gains for 2002:  $10
-
-You take a capital loss of $100 in 2005, but you can only take a loss
to the extent of 2005 capital gains ($20).  Therefore, all of your
2005 capital gains are brought to 0, (this leaves $80 in capital
losses).  You then amend your 2004 tax return to bring your capital
gains to 0, (this leaves $65 in capital losses).  Do the same for
2003, (this leaves $50 in capital losses).  Again, do this for 2002,
(this leaves $40 in capital losses).  Now, you have $40 in capital
losses to use in the futute (for the next 5 years).  Therefore, if you
have $60 in capital gains in 2006, you can offset that with your
remaining $40 loss, leaving you with only a $20 gain in 2006.

As always, talk to your tax advisor for information regarding your
specific situation.