Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 69-13

1969-1 C.B. 25

Sec. 48

IRS Headnote

A taxpayer operating ski recreational facilities in a National Forest area under a limited use permit from the United States Forest Service is not engaged in the trade or business of furnishing transportation services for investment credit purposes.

Full Text

Rev. Rul. 69-13

Advice has been requested whether, under the circumstances described below, a taxpayer is engaged in the trade or business of furnishing transportation services, within the meaning of sections 1.48-1(a) and (d) of the Income Tax Regulations, for investment credit purposes.

The taxpayer is engaged in a trade or business operated in a National Forest area under a limited use permit from the United States Forest Service. The facilities operated by the taxpayer include ski slopes, cable rides (one of which is a chair ski-lift), rental shops, and restaurants.

Section 38 of the Internal Revenue Code of 1954 allows a credit against Federal income tax for qualified investment in "section 38 property." The determination of what items of business property qualify as "section 38 property" is made in accordance with the rules provided in section 48 of the Code.

Sections 1.48-1(a) and (d) of the regulations provide, in pertinent part, that the term "section 38 property" means "tangible personal property" or any other tangible property (not including buildings or their structural components) but only if such other tangible property is used as an integral part of furnishing specified activities, including transportation services furnished by a person engaged in a trade or business of furnishing such service.

Section 1.48-1(d)(3) of the regulations, in part, provides examples of transportation businesses as including railroads, airlines, bus companies, shipping or trucking companies, and oil pipeline companies, as illustrative of the business of furnishing transportation services contemplated by section 48(a)(1)(B) of the Code.

Consistent with those examples, it is held that the taxpayer, in the instant case, is not engaged in the trade or business of furnishing transportation services, within the meaning of section 48 of the Code and sections 1.48-1(a) and (d) of the regulations, for investment credit purposes.