- 38 -
Here, we have previously determined that the storage rack
system does not function as part of a machine. Additionally, we
find that the storage rack system provides more than a mere
"incidental" structural support function. Even if structural
support is not the "primary" function of the racks, it is
certainly more than "incidental" to their other functions.
Moreover, the storage rack system is a permanent part of the
Reserve Facility. It is the main structural support for the
Reserve Facility, a structure that we have already found to be
inherently permanent. Without the storage rack system, the roof
and most of the walls of the Reserve Facility would collapse.
Therefore, we find that the storage rack system is an inherently
permanent structural component of the Reserve Facility and does
not qualify as section 38 property.
2. Concrete Slab Floor
Petitioner maintains that the concrete slab floor is also an
item of machinery because it was specially designed to support
the storage rack system and the transtackers. In support of this
argument, petitioner again relies upon Rev. Rul. 79-183, supra,
and Rev. Rul. 79-181, supra, in addition to our determination in
Texas Instruments, Inc. v. Commissioner, T.C. Memo. 1992-306,
where we held that a specially designed floor was essential to
the operation of the taxpayer's machinery, notwithstanding the
fact that part of the floor was used for activities that did not
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