DocketNumber: Docket No. 7584-87
Citation Numbers: 55 T.C.M. 1516, 1988 Tax Ct. Memo LEXIS 386, 1988 T.C. Memo. 362
Filed Date: 8/9/1988
Status: Non-Precedential
Modified Date: 11/20/2020
MEMORANDUM OPINION
POWELL,
In 1985 petitioners purchased a duplex apartment building. They occupied one-half of the building and rented the other half. Petitioners maintain that they are entitled to an investment credit under section 38. 2 Section 48(a)(1), in relevant part, defines "section 38 property" for which the credit is available to mean:
(A) tangible personal property (other than an air conditioning or heating unit), or
(B) other tangible property (
(i) is used as an integral part of manufacturing, production, or extraction or of furnishing transportation, communications, electrical energy, gas, water, or sewage disposal services * * *. [Emphasis added.]
Faced with the clear language that is emphasized petitioners argued that under respondent's regulations defining an "integral part" their duplex qualifies as "other tangible property" under section 48(a)(1)(B)(i). 1988 Tax Ct. Memo LEXIS 386">*388 The regulations provide:
Property is used as an integral part of one of the specified activities if it is used directly in the activity and is essential to the completeness of the activity.
In petitioners' view their activity is renting space and the duplex is an integral part of that activity. But the specified activities referred to in the regulations are activities contained in
1. This case was assigned pursuant to the provisions of
2. All statutory references are to the Internal Revenue Code of 1954, as amended, and as in effect during the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. ↩