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(1) In general.--* * * the term "section 38
property" means--
(A) tangible personal property (other
than an air conditioning or heating unit), or
(B) other tangible property (not
including a building and its structural
components) but only if such property--
(i) is used as an integral
part of manufacturing, production,
or extraction or of furnishing
transportation, communications,
electrical energy, gas, water, or
sewage disposal services, or
* * * * * * *
(iii) constitutes a facility
used in connection with any of the
activities referred to in clause
(i) for the bulk storage of
fungible commodities (including
commodities in a liquid or gaseous
state), or
Thus, section 48(a)(1) creates two distinct categories of
section 38 property: (1) Tangible personal property; and (2)
other tangible property, other than a building and its structural
components, but only if the property is used as an integral part,
or used in connection with, one of the qualifying activities
described in section 48(a)(1)(B)(i). Munford, Inc. v.
Commissioner, 87 T.C. 463, 475 (1986), affd. 849 F.2d 1398 (11th
Cir. 1988). Petitioner does not argue that the property in
question constitutes other tangible property described in section
48(a)(1)(B). Rather, petitioner asks us to hold that the Reserve
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