- 44 - 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 arePage: Previous 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 Next
Last modified: May 25, 2011