L.L. Bean, Inc., Leon Gorman, Tax Matters Person - Page 44

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          is necessary because the water could not reach the lower levels             
          due to the intervening merchandise on the shelves.                          
               In Ponderosa Mouldings, Inc. v. Commissioner, supra, the               
          taxpayer argued that because of the fire hazard involved in the             
          manufacture of its wood moldings, its sprinkler system should be            
          considered as machinery necessary to its operation and not as a             
          structural component, which is part of the operation or                     
          maintenance of the building.  Id. at 95.  We disagreed and held             
          that the entire sprinkler system was a structural component.  We            
          find the facts in the instant case essentially similar to those             
          in Ponderosa Mouldings.  The sprinkler system here relates to the           
          operation and the maintenance of the Reserve Facility and, thus,            
          is a structural component not eligible for an ITC.                          
               Petitioner contends that the heating system was designed to            
          provide for the operation and the maintenance of the Reserve                
          Facility's water-based sprinkler system and not for the comfort             
          of petitioner's employees.  Respondent argues that the heating              
          system for the Reserve Facility is specifically excluded from the           
          definition of "tangible personal property" under section                    
          48(a)(1)(A).  Section 1.48-1(e)(2), Income Tax Regs., defines               
          heating systems as structural components unless the "sole                   
          justification" test is met.                                                 

               [T]he term "structural components" does not include                    
               machinery the sole justification for the installation                  
               of which is the fact that such machinery is required to                
               meet temperature or humidity requirements which are                    




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