Respondent relies upon his regulation, sec. 1.48-2(b)(6), Income Tax Regs., which states that "Property shall be deemed to be acquired when reduced to physical possession or control." He argues that petitioner had possession of the three units prior to January 1, 1962, on the basis of the following:

(1) Petitioner paid the freight from Goss' place of business;

(2) By July 1961, the three units had been delivered to a warehouse in Madison, Wis., where petitioner's principal place1967 U.S. Tax Ct. LEXIS 132">*142 of business was located;

(3) Petitioner paid the warehouse charges, although it was later reimbursed by Goss;

(4) Petitioner insured the units, although the policy named Goss as a beneficiary to assure payment of the sums due;

(5) All three units had been delivered to petitioner's place of of business by December 31, 1961;

(6) By December 31, 1961, petitioner had paid a large portion of the purchase price of the units.

Respondent also contends that petitioner had control over the units prior to January 1, 1962, as evidenced by the fact that petitioner, directly or indirectly, paid the salaries of all those connected with the installation of the units and allegedly could have, at any time, dismissed any of those so working.

Petitioner counters by arguing that in order to have possession one must also have control and that it did not have control of the three units until they were ready for commercial operation and acceptance; that Goss, and not petitioner, had the primary responsibility of installation, although petitioner was to pay all expenses; and that petitioner bought installed units of a printing press and not component parts thereof, so that the presence of each of the 1967 U.S. Tax Ct. LEXIS 132">*143 three uninstalled units at petitioner's place of business by December 31, 1961, is immaterial.

47 T.C. 630">*635 Unfortunately, there is nothing in the legislative history that is of direct help to us in resolving the issue before us. Congress enacted the investment credit provisions of the Code as part of the Revenue Act of 1962 in an attempt to stimulate investment so as to contribute to economic expansion. See H. Rept. No. 1447, 87th Cong., 2d Sess., p. 7 (1962); S. Rept. No. 1881, 87th Cong., 2d Sess., pp. 10, 11 (1962). But this background is of limited significance in determining whether an investment made before the legislation became law should or should not qualify. Any given cutoff date has an inherently arbitrary effect even though there are articulated motivations for its selection. See page 637, infra.

Congress did, however, clearly state that, in determining whether property was "acquired after December 31, 1961" within the meaning of section 48(b)(2), the principles applicable with respect to depreciation under section 167(c) were to be applied. See H. Rept. No. 1447, supra at A21; S. Rept. No. 1881, supra at 158. Respondent faithfully charted this course 1967 U.S. Tax Ct. LEXIS 132">*144 in promulgating section 1.48-2(b), Income Tax Regs, which adopts the governing rule under section 167(c). See sec. 1.167(c)-1, Income Tax Regs. As has been previously stated, section 1.48-2(b) provides that "Property shall be deemed to be acquired when reduced to physical possession or control."

This regulation, however, is directed for the most part, as is respondent's argument herein, on the when of possession or control and fails to deal with the nature of the property subject to these powers. Undoubtedly petitioner herein did have "possession or control" of something on or before December 31, 1961, but the critical question requiring resolution is possession or control of what.

The fact that the major pieces of the three units were physically present at petitioner's place of business on or before December 31, 1961, is not determinative. Nor is the fact that on or before that date petitioner paid the freight and insurance (which named Goss as a beneficiary), the expenses of installation, or a large portion of the purchase price. Respondent's regulations specifically provide that payment is not the touchstone. Sec. 1.48-2(c), example (3), Income Tax Regs.

Respondent1967 U.S. Tax Ct. LEXIS 132">*145 relies most heavily on the fact that, except for Seymour Johnson, petitioner hired the personnel who worked on the installation of the units and paid their salaries and expenses as well as those of Johnson. He contends that under the agreement Goss disclaimed any responsibility for the erection and installation of the units and merely undertook to provide petitioner with access to the necessary supervisory personnel. We disagree. In point of fact, sections 6 and 7 of the agreement in combination make it clear that Goss was responsible for the work of "erectors," i.e., supervisory personnel. Moreover, if 47 T.C. 630">*636 Goss intended that its responsibility was to be so limited, we believe that it would have excepted installation from its guarantee and warranties. ³

We think that good business reasons dictated the provisions governing installation: (1) To avoid Goss' having to estimate1967 U.S. Tax Ct. LEXIS 132">*146 the costs of installation in petitioner's plant and including that cost in the quoted price of the press and (2) to save on labor costs since Goss was in Chicago, Ill., and petitioner in Madison, Wis.

We do not have before us a situation calling for an allocation of the time of acquisition to various parts of the property such as is involved in the determination of the holding period of a building for the purpose of determining long-term or short-term gain. Paul v. Commissioner, 206 F.2d 763 (C.A. 3, 1953); Fred Draper, 32 T.C. 545">32 T.C. 545 (1959). Indeed, the legislative history of section 167(c), which is the admitted progenitor of section 48(b), indicates clearly that a comparable allocation is appropriate only in determining whether section 48(b)(1) applies. Thus, in enacting section 167(c), the Senate sought to make completion after December 31, 1954, the sole test for the purpose of determining whether accelerated depreciation applied. See S. Rept. No. 1622, 83d Cong., 2d Sess., pp. 28-29, 202 (1954). The conference committee specifically rejected this proposal and returned to the dichotomous pattern of the House1967 U.S. Tax Ct. LEXIS 132">*147 bill so that, for purposes of depreciation, an allocation of cost is made only with respect to that portion of property "constructed, reconstructed or erected" on or before the critical date. ⁴ H. Rept. No. 2543, 83d Cong., 2d Sess, p. 29 (1954). The various committee reports dealing with sections 167(c) and 48(b) indicate clearly that Congress was aware of the difference in treatment resulting from this dichotomous pattern. H. Rept. No. 1337, 83d Cong., 2d Sess., p. A49 (1954); S. Rept. No. 1622, supra at 202; H. Rept. No. 2543, supra at 29; H. Rept. No. 1447, supra at A21; S. Rept. No. 1881, supra at 158; cf. sec. 48(a)(1)(C), I.R.C. 1954, and sec. 1.179-3(c)(1) and (2), Income Tax Regs.

1967 U.S. Tax Ct. LEXIS 132">*148 Thus, Congress in effect adopted the rationale of Paul v. Commissioner, supra, and 32 T.C. 545">Fred Draper, supra, and enacted section 48(b)(1) to cover the type of situation involved therein -- namely, where a building is not only erected on, and affixed to, a taxpayer's land but is also 47 T.C. 630">*637 constructed in accordance with his specifications. Moreover, realistically, there is a marked difference between a half-completed building and a half-completed machine.

The underlying essential fact is that petitioner contracted for and Goss agreed to furnish three installed units of a printing press and not an uninstalled assortment of components thereof. This is the clear import of the provision in the agreement that Goss was to furnish installation personnel, albeit at petitioner's expense, and that the three units were to be tested after notification to petitioner by Goss that they were "ready for commercial operation and acceptance."

We conclude that the what in this case was three installed units of a printing press and that these were the property with respect to which "physical possession, or control" and therefore1967 U.S. Tax Ct. LEXIS 132">*149 time of acquisition should be measured. ⁵The installation herein was a complex operation requiring extensive time to perform. Whether an acquisition of installed property, where the installation involved a mere turning of a few screws or hooking up of some wires or pipe, would be entitled to similar treatment we need not and do not now decide.

While the record does not etch the progress of the installation of the three units with the utmost precision, we think it clear that they were not installed until well after January 1, 1962. Therefore, the property to which the investment credit applied was not in existence until after that date.

One final word. The installation of the three units proceeded in normal fashion consistent with business exigencies. There is not the slightest suggestion1967 U.S. Tax Ct. LEXIS 132">*150 in the record that it was delayed beyond December 31, 1961, in order to enhance petitioner's chance of becoming entitled to the investment credit. Indeed, during the latter part of 1961, petitioner had reason to believe that the cutoff date would be December 31, 1960. See General Explanation of Committee Discussion of Revenue Bill of 1961, Joint Committee on Internal Revenue Taxation, p. 7 (Sept. 29, 1961). The bill providing for a December 31, 1961, cutoff date (H.R. 10650) was not introduced until March 12, 1962, well after the time the installation of the three units was completed In this connection, respondent has contended that allowing petitioner the benefit of the investment credit results in a windfall because it was not anticipated by petitioner at the time it entered into the agreement with Goss, i.e., November 3, 1960, and, therefore, it in no way fulfills the purpose of the statute, i.e., stimulation of investment. It is sufficient to note that Congress did not make the contract date the determining factor, that the possibility of an investment 47 T.C. 630">*638 credit was the subject of public discussion for some time prior to its enactment, and that it was for this reason1967 U.S. Tax Ct. LEXIS 132">*151 that the bill, as finally enacted, retained the December 31, 1961, date as originally provided by the House of Representatives rather than the June 30, 1962, date contained in the Senate version. See statement of Senator Kerr, floor manager of the Revenue Act of 1962 in the Senate; S. Rept. No. 1881, supra at 13.

We hold that under both the statute and respondent's regulations petitioner is entitled to an investment credit as claimed for its taxable year ending September 30, 1962.

In order to reflect other adjustments (including an adjustment for depreciation on the three units, which petitioner concedes was not allowable for any period prior to Feb. 1, 1962),

Decision will be entered under Rule 50.