- 69 -
Respondent contends further that the disputed property items
in the subject category are distinguishable from the primary and
secondary electrical distribution property items involved in
Scott Paper Co. v. Commissioner, supra, because in that case the
electrical components were readily removable, they were not
inherently permanent, they were inextricably linked to and
installed in conjunction with the addition of particular pieces
of machinery, and most of the electricity carried by the
electrical components was conveyed to the new equipment.
In Morrison, Inc. v. Commissioner, T.C. Memo. 1986-129, we
explained our rationale for finding a portion of the primary and
secondary electrical system in Scott Paper Co. eligible property
for ITC as follows:
In Scott Paper Co., we concluded that the components of the
taxpayer's primary electric system which supplied the
electric needs of process machinery rather than contributing
to the overall operation or maintenance of buildings, was
not an inherently permanent structure and the taxpayers were
entitled to the investment tax credit on these components.
In reaching this conclusion we placed great emphasis on the
language in section 1.48-1(e)(2), Income Tax Regs., which
defines "structural components" by listing examples and
including as the last line of the regulation "and other
components relating to the operation or maintenance of a
building." In Scott Paper Co., supra at 183, we
characterized that phrase as follows:
46 (...continued)
section 48." (Emphasis added)).
Thus, it is not clear whether Illinois Cereal actually supports
respondent's position.
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