Rev. Rul. 85-90

1985-2 C.B. 8, 1985-26 I.R.B. 4.

INVESTMENT CREDIT; HYDRAULIC DOCK LEVELER

Published: July 1, 1985

SECTION 48-DEFINITION; SPECIAL RULES, 26 CFR 1.48-1: Definition section 38 property

  Investment credit; hydraulic dock leveler. A hydraulic dock leveler that is bolted to the loading dock and used in the operation and maintenance of an office building is a structural component of a building within the meaning of section 1.48-1(e)(2) of the regulations and does not qualify as section 38 property.

ISSUE

  Whether the hydraulic dock leveler described below qualifies as section 38 property for purposes of the investment tax credit.

FACTS

  In 1983, the taxpayer constructed a new office building equipped with a hydraulic dock leveler that is bolted to the loading dock. The dock leveler is an adjustable ramp that serves to bridge the gap between the dock and the truck and compensates for variances in the height of truck beds. The leveler weighs approximately 2000 pounds, has a 25,000 pound load bearing capacity and consists of a 6 x 8 foot steel platform deck and a hydraulic system that raises and lowers the deck at one end. The pressure for the hydraulic system is provided by an electrically driven pump. The dock leveler is recovery property under section 168 of the Internal Revenue Code.

LAW AND ANALYSIS

  Section 38 of the Code allows a credit against federal income tax for qualified investment in section 38 property. Section 38 property is defined in section 48.

  Section 48(a)(1) of the Code defines section 38 property to include (A) tangible personal property or (B) other tangible property (not including a building and its structural components) but only if the other tangible property is used as an integral part of manufacturing, production, or other specified activity. The term section 38 property includes only recovery property (without regard to any useful life) and any other property with respect to which depreciation is allowable that has a useful life of 3 years or more.

  Section 1.48-1(c) of the Income Tax Regulations provides that the term  'tangible personal property' means any tangible property except land and improvements thereto, such as buildings or other inherently permanent structures. The term includes all property (other than structural components) that is contained in or attached to a building and all property that is in the nature of machinery (other than structural components of a building or other inherently permanent structures) even though located outside a building. Thus, for example, a gasoline pump, hydraulic car lift, or automatic vending machine, although annexed to the ground, shall be considered tangible personal property.

  Section 1.48-1(e)(1) of the regulations provides that buildings and structural components thereof do not qualify as section 38 property.

  Section 1.48-1(e)(2) of the regulations defines the term 'structural components.' The term includes such parts of a building as walls, partitions, floors and ceilings; windows and doors; all components of a central air- conditioning or heating system; plumbing and plumbing fixtures; electric wiring and lighting fixtures; escalators and elevators and other components relating to the operation or maintenance of a building.

  The dock leveler is an important truck loading area accessory. Because the dock leveler is permanently installed and is used in the operation and maintenance of the office building, it is a structural component of a building within the meaning of section 1.48-1(e)(2) of the regulations. It is not, therefore, tangible personal property or qualifying other tangible property.

HOLDING

  The hydraulic dock leveler described in the facts is a structural component of a building within the meaning of section 1.48-1(e)(2) of the regulations and does not qualify as section 38 property.

Rev. Rul. 85-90, 1985-2 C.B. 8, 1985-26 I.R.B. 4.