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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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