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essential for the operation of other machinery or the
processing of materials or foodstuffs. Machinery may
meet the "sole justification" test provided by the
preceding sentence even though it incidentally provides
for the comfort of employees, or serves, to an
insubstantial degree, areas where such temperature or
humidity requirements are not essential." [Emphasis
added.]
To satisfy the "sole justification" test, petitioner must
establish that the heating system is machinery, the sole
justification for the installation of which was to meet
temperature or humidity requirements which are essential for the
operation of other machinery. Sec. 1.48-1(e)(2), Income Tax
Regs. Petitioner has failed to present sufficient evidence
demonstrating that the sole justification of the heating system
was essential for the operation of the sprinkler system.
Furthermore, we have determined that the sprinkler system is not
machinery but rather a structural component of the Reserve
Facility. Therefore, the Reserve Facility's heating system is
ineligible for an ITC.
B. The Mezzanine System
Petitioner also claimed an ITC for the costs of the
Mezzanine System located on the ground floor of its two-story
1986 Shipping Building. The Mezzanine System occupies
approximately 290 feet by 219 feet of the 1986 Shipping Building
and consists of the following items: (1) Ground-level storage
racks; (2) a horizontal steel structure joined to and mounted on
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