As the statutory language indicates, sections 48(a)(1)(A) and 48(a)(1)(B) create two distinct categories of section 38 property. First, tangible personal property will be considered section 38 property under section 48(a)(1)(A). Second, other tangible property, other than a building and its structural components, may qualify as section 38 property under section 48(a)(1)(B), but only if it is used as an integral part of, or (in the case of research facilities and bulk storage facilities described respectively in subparagraphs (ii) and (iii) thereof), used in connection with, one of the qualifying activities described in section 48(a)(1)(B)(i). See Giannini Packing Corp. v. Commissioner, 83 T.C. 526">83 T.C. 526, 83 T.C. 526">531-532 (1984);1986 U.S. Tax Ct. LEXIS 62">*88 Central Citrus Co. v. Commissioner, 58 T.C. 365">58 T.C. 365, 58 T.C. 365">370 (1972); Schuyler Grain Co. v. Commissioner, 50 T.C. 265">50 T.C. 265, 50 T.C. 265">269 (1968), affd. 411 F.2d 649">411 F.2d 649 (7th Cir. 1969). Petitioner has conceded that the Addition is used neither as an integral 87 T.C. 463">*476 part of, nor in connection with, a qualifying activity, ⁷ and, thus, does not argue that it constitutes other tangible property described in section 48(a)(1)(B). Rather, petitioner asks us to hold that the Addition is tangible personal property qualifying as section 38 property under section 48(a)(1)(A). Thus, the focus of our inquiry is whether the Addition constitutes or consists of tangible personal property within the meaning of section 48(a)(1)(A). ⁸

1986 U.S. Tax Ct. LEXIS 62">*89 The term "tangible personal property" is defined in section 1.48-1(c), Income Tax Regs. This regulation, which was promulgated under the broad grant of authority contained in section 38(b), provides as follows:

(c) Definition of tangible personal property. -- If property is tangible personal property it may qualify as section 38 property irrespective of whether it is used as an integral part of an activity (or constitutes a research or storage facility used in connection with such activity) specified in paragraph (a) of this section. Local law shall not be controlling for purposes of determining whether property is or is not "tangible" or "personal." Thus, the fact that under local law property is held to be personal property or tangible property shall not be controlling. Conversely, property may be personal property for purposes of the investment credit even though under local law the property is considered to be a fixture and therefore real property. For purposes of this section, the term "tangible personal property" means any tangible property except land and improvements thereto, such as buildings or other inherently permanent structures (including items which are structural1986 U.S. Tax Ct. LEXIS 62">*90 components of such buildings or structures). Thus, buildings, swimming 87 T.C. 463">*477 pools, paved parking areas, wharves and docks, bridges, and fences are not tangible personal property. Tangible personal property includes all property (other than structural components) which is contained in or attached to a building. Thus, such property as production machinery, printing presses, transportation and office equipment, refrigerators, grocery counters, testing equipment, display racks and shelves, and neon and other signs, which is contained in or attached to a building constitutes tangible personal property for purposes of the credit allowed by section 38. Further, all property which is in the nature of machinery (other than structural components of a building or other inherently permanent structure) shall be considered tangible personal property 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. [Emphasis supplied.]

Respondent points out that under section 1.48-1(c), Income Tax Regs., the term "tangible personal property" 1986 U.S. Tax Ct. LEXIS 62">*91 does not include land and improvements thereto, such as buildings or other inherently permanent structures, or structural components of such buildings or structures. In respondent's view, the Addition constitutes a building and is thus excluded from the definition of tangible personal property by the express terms of section 1.48-1(c), Income Tax Regs. Petitioner asserts, however, that the Addition is not a building under applicable judicial interpretations of such term. Further, petitioner contends that the Addition is in essence a giant refrigerator or freezer and is "property which is in the nature of machinery" described in the penultimate sentence of section 1.48-1(c), Income Tax Regs. Petitioner argues that the Addition therefore constitutes tangible personal property. In view of the respective positions of the parties, and in light of the fact that a determination that the Addition is a building would obviate the need for further inquiry herein, we will first address the issue of whether the Addition is a building.

When enacting the investment tax credit provisions as part of the Revenue Act of 1962, Pub. L. 87-834, 76 Stat. 960, Congress excluded buildings and their structural1986 U.S. Tax Ct. LEXIS 62">*92 components from eligibility for the credit. In doing so, Congress intended that the term "building" be given its "commonly accepted meaning, that is, a structure or edifice enclosing a space within its walls, and usually covered by a roof." H. Rept. 1447, 87th Cong., 2d Sess. A18, 1962-3 C.B. 405, 516; 87 T.C. 463">*478 S. Rept. 1881, 87th Cong., 2d Sess. 154-155, 1962-3 C.B. 707, 858-859. See, e.g., Yellow Freight System, Inc. v. United States, 538 F.2d 790">538 F.2d 790, 538 F.2d 790">795-796 (8th Cir. 1976), revg. and remanding 413 F. Supp. 357">413 F. Supp. 357 (W.D. Mo. 1975); Samis v. Commissioner, 76 T.C. 609">76 T.C. 609, 76 T.C. 609">617 (1981); Valmont Industries, Inc. v. Commissioner, 73 T.C. 1059">73 T.C. 1059, 73 T.C. 1059">1072 (1980); Satrum v. Commissioner, 62 T.C. 413">62 T.C. 413, 62 T.C. 413">416 (1974). Nevertheless, the term "building," as used in this context, "has caused much consternation among taxpayers and has produced a correspondingly large amount of litigation." Scott Paper Co. v. Commissioner, 74 T.C. 137">74 T.C. 137, 74 T.C. 137">177 (1980) (citations omitted). Certain structures1986 U.S. Tax Ct. LEXIS 62">*93 which might in common understanding be considered buildings have, in various cases, been held not to be buildings for purposes of the investment tax credit. Brown & Williamson Tobacco Corp. v. United States, 369 F. Supp. 1283">369 F. Supp. 1283 (W.D. Ky. 1973), affd. per curiam 491 F.2d 1258">491 F.2d 1258 (6th Cir. 1974) (tobacco sheds); Brown-Forman Distillers Corp. v. United States, 205 Ct. Cl. 402">205 Ct. Cl. 402, 205 Ct. Cl. 402">414-416, 499 F.2d 1263">499 F.2d 1263, 499 F.2d 1263">1270-1271 (1974) (whiskey maturation facilities); Thirup v. Commissioner, 508 F.2d 915">508 F.2d 915 (9th Cir. 1974), revg. 59 T.C. 122">59 T.C. 122 (1972) (greenhouses). See generally Consolidated Freightways v. Commissioner, 74 T.C. 768">74 T.C. 768, 74 T.C. 768">794 (1980), affd. in part and revd. in part 708 F.2d 1385">708 F.2d 1385 (9th Cir. 1983). It is thus accurate to say that, in the investment tax credit context, the term "building" has become a term of art. See 74 T.C. 137">Scott Paper Co. v. Commissioner, supra at 177. ⁹

1986 U.S. Tax Ct. LEXIS 62">*94 87 T.C. 463">*479 The term "building" is defined in section 1.48-1(e)(1), Income Tax Regs., which provides, in pertinent part, as follows:

Sec. 1.48-1(e). Definition of building and structural components.

(1) Buildings and structural components thereof do not qualify as section 38 property. The term "building" generally means any structure or edifice enclosing a space within its walls, and usually covered by a roof, the purpose of which is, for example, to provide shelter or housing, or to provide working, office, parking, display, or sales space. The term includes, for example, structures such as apartment houses, factory and office buildings, warehouses, barns, garages, railway or bus stations, and stores. * * * Such term does not include (i) a structure which is essentially an item of machinery or equipment, or (ii) a structure which houses property used as an integral part of an activity specified in section 48(a)(1)(B)(i) if the use of the structure is so closely related to the use of such property that the structure clearly can be expected to be replaced when the property it initially houses is replaced. Factors which indicate that a structure is closely related to the use of1986 U.S. Tax Ct. LEXIS 62">*95 the property it houses include the fact that the structure is specifically designed to provide for the stress and other demands of such property and the fact that the structure could not be economically used for other purposes. Thus, the term "building" does not include such structures as oil and gas storage tanks, grain storage bins, silos, fractionating towers, blast furnaces, basic oxygen furnaces, coke ovens, brick kilns, and coal tipples.

This regulation has been interpreted to establish a two-part test which considers both "appearance" and "function" in determining whether a particular structure is a "building." Some of the decided cases appear to focus more heavily upon the appearance test which, as its name implies, looks to whether the structure has the appearance of a building in the ordinary sense. See Yellow Freight System, Inc. v. United States, 538 F.2d 790">538 F.2d 790, 538 F.2d 790">797-798 (8th Cir. 1976); cf. A.C. Monk & Co. v. United States, 686 F.2d 1058">686 F.2d 1058 (4th Cir. 1982), affg. in part, revg. and remanding in part an unreported District Court decision. However, most decisions of this Court and other courts have tended to emphasize1986 U.S. Tax Ct. LEXIS 62">*96 the functional test. See, e.g., Thirup v. Commissioner, 508 F.2d 915">508 F.2d at 919; Consolidated Freightways, Inc. v. United States, 223 Ct. Cl. 443">223 Ct. Cl. 443, 223 Ct. Cl. 443">456-457, 620 F.2d 862">620 F.2d 862, 620 F.2d 862">870 (1980). Brown-Forman Distillers Corp. v. United States, 205 Ct. Cl. 402">205 Ct. Cl. 402, 205 Ct. Cl. 402">416-418, 499 F.2d 1263">499 F.2d 1263, 499 F.2d 1263">1270-1272 (1974); Consolidated Freightways v. Commissioner, 74 T.C. 768">74 T.C. 768, 74 T.C. 768">793-795 (1980), affd. on this issue 708 F.2d 1385">708 F.2d 1385 (9th Cir. 1983); 74 T.C. 137">Scott 87 T.C. 463">*480 at 178; 73 T.C. 1059">Valmont Industries, Inc. v. Commissioner, supra at 1072; Lesher v. Commissioner, 73 T.C. 340">73 T.C. 340, 73 T.C. 340">363 (1979), affd. per curiam 638 F.2d 64">638 F.2d 64 (8th Cir. 1981); 62 T.C. 413">Satrum v. Commissioner, supra at 416; Central Citrus Co. v. Commissioner, 58 T.C. 365">58 T.C. 365, 58 T.C. 365">371 (1972); Catron v. Commissioner, 50 T.C. 306">50 T.C. 306, 50 T.C. 306">310-311 (1968).

The functional test was first expressed 1986 U.S. Tax Ct. LEXIS 62">*97 by this Court in 50 T.C. 306">Catron v. Commissioner, supra. Therein, we noted that section 1.48-1(e)(1), Income Tax Regs., defines "building" as a structure providing space for certain enumerated purposes, such as "the furnishing of shelter or housing, or of working, office, parking display or sales space." While noting that the purposes set forth in section 1.48-1(e)(1), Income Tax Regs., are exemplary and not all-inclusive, we nevertheless construed the regulation to limit the scope of the term "building" to structures used for purposes or functions similar to those enumerated therein. 50 T.C. 306">Catron v. Commissioner, supra at 311. More recently, this Court has described the functional test as one which inquires whether the purpose of the structure at issue is a purpose ejusdem generis to the purposes described by example in section 1.48-1(e)(1), Income Tax Regs., and whether the structure performs a function similar to those structures therein enumerated as buildings, i.e., apartment houses, factory and office buildings, warehouses, barns, garages, railway or bus stations, and stores. Consolidated Freightways v. Commissioner, 74 T.C. 768">74 T.C. 795.1986 U.S. Tax Ct. LEXIS 62">*98

In applying the functional test, a major focus of inquiry is whether the structure provides working space for employees which is more than merely incidental to the primary function of the structure. See, e.g., Brown-Forman Distillers Corp. v. United States, 205 Ct. Cl. 402">205 Ct. Cl. at 418, 499 F.2d 1263">499 F.2d at 1271; 73 T.C. 1059">Valmont Industries, Inc. v. Commissioner, supra at 1072; 74 T.C. 137">Scott Paper Co. v. Commissioner, supra at 178; 50 T.C. 306">Catron v. Commissioner, supra at 316. In this regard, it is appropriate to consider both the quantity and quality of the human activity within the structure. See Consolidated Freightways, Inc. v. United States, 223 Ct. Cl. 443">223 Ct. Cl. at 461, 620 F.2d 862">620 F.2d at 873; Consolidated Freightways v. Commissioner, 74 T.C. 768">74 T.C. 795; 62 T.C. 413">Satrum v. Commissioner, supra at 417. With the foregoing principles in mind, we now consider whether the Addition constitutes a "building."

87 T.C. 463">*481 It is clear from the testimony of witnesses and photographs in the record that the Addition resembles1986 U.S. Tax Ct. LEXIS 62">*99 a building in appearance, and petitioner does not argue to the contrary. Thus, the Addition would be considered a building under the appearance test of section 1.48-1(e)(1), Income Tax Regs. However, the appearance test alone is not determinative; decisions of this Court have emphasized the functional test, and we therefore proceed with our inquiry thereunder.

The Addition consists of three principal areas -- the truck loading platform, the rail loading platform, and the refrigerated area. Since these areas are distinct, we think it appropriate to consider each such area separately under the functional test. See, e.g., 58 T.C. 365">Central Citrus Co. v. Commissioner, supra at 371; and 50 T.C. 306">Catron v. Commissioner, supra at 313. Cf. 74 T.C. 137">Scott Paper Co. v. Commissioner, supra at 173-174; Illinois Cereal Mills, Inc. v. Commissioner, 789 F.2d 1234">789 F.2d 1234 (7th Cir. 1986), affg. a Memorandum Opinion of this Court. ¹⁰

1986 U.S. Tax Ct. LEXIS 62">*100 First, we examine the truck loading platform. This area is an enclosed space which comprises approximately 3,900 square feet. In this area, petitioner's employees load and unload refrigerated trucks which transport frozen foods to and from the Addition. Unlike the refrigerated area of the Addition, the truck loading platform is not refrigerated and thus, the employees need not and do not wear protective cold weather gear therein. The platform contains sufficient space for consolidating and storing products so that the frozen foods can be quickly loaded when a common carrier arrives. Petitioner's employees assigned to the Addition 87 T.C. 463">*482 spend a substantial part of their workday within the loading platform area.

The purpose of the truck loading platform is to facilitate the loading and unloading of frozen food products, and this purpose is accomplished primarily by the efforts of petitioner's employees who work in this area. Human activity is essential, rather than merely incidental, to the function of the platform. Cf. Consolidated Freightways v. Commissioner, 74 T.C. 768">74 T.C. 795-796. In view of the foregoing, we hold that the truck loading platform1986 U.S. Tax Ct. LEXIS 62">*101 is a "building" and that the costs relating thereto are thus ineligible for the investment tax credit.

Our conclusion is supported by the case law involving comparable facilities. In 538 F.2d 790">Yellow Freight System, Inc. v. United States, supra, truck loading docks used by a trucking line to facilitate the movement of freight from inbound to outbound vehicles were found to provide shelter and work space for employees and thus, were held to be "buildings" for purposes of the investment tax credit by the Court of Appeals for the Eighth Circuit. A similar result was reached by the Court of Claims in Consolidated Freightways, Inc. v. United States, 223 Ct. Cl. 443">223 Ct. Cl. 443, 620 F.2d 862">620 F.2d 862 (1980), and by this Court in Consolidated Freightways v. Commissioner, 74 T.C. 768">74 T.C. 768 (1980), affd. on this issue 708 F.2d 1385">708 F.2d 1385 (9th Cir. 1983). ¹¹

1986 U.S. Tax Ct. LEXIS 62">*102 The foregoing considerations require a similar conclusion with regard to the Addition's rail loading platform. While the record contains little information concerning the operation of this platform, we discern no purpose served thereby other than to provide a sheltered area in which petitioner's employees can unload refrigerated boxcars which deliver products to the Addition. Since this area serves to provide working space for petitioner's employees in much the same 87 T.C. 463">*483 manner as the truck loading platform, we also conclude that this structure is a building. ¹²

Having concluded that the truck and rail loading platforms constitute buildings and that the costs relating thereto are ineligible for the investment tax credit, we now consider the refrigerated area of the1986 U.S. Tax Ct. LEXIS 62">*103 Addition. ¹³ This area comprises approximately 34,650 square feet. It is used to store prepackaged, final processed frozen foods on behalf of the processors of such foods pending delivery to customers. The temperature therein is maintained between minus five degrees Fahrenheit (-5 degrees F) and zero degrees Fahrenheit (0 degrees F). Due to the low temperature, petitioner's employees work within this area only to load and unload frozen foods, take inventory, and perform occasional repairs or maintenance. When doing so, they wear cold weather gear, including coveralls, parkas, hats, and gloves. The employees generally spend no more than 12 minutes at a time in the refrigerated area.

1986 U.S. Tax Ct. LEXIS 62">*104 We think that the principal purpose or function of the refrigerated area is not to furnish working space for petitioner's employees, but rather, to provide an area in which frozen foods may be stored at low temperature. In contrast with the truck and rail loading platforms, the refrigerated area of the Addition is maintained at a temperature which limits, rather than promotes, human activity. Due to the cold temperature, the activities of petitioner's employees are limited in both scope and duration. In the case of the Addition's refrigerated area, the structure itself serves the principal function of low temperature storage of products, and the activities of petitioner's employees are merely supportive of and ancillary to this function. Accordingly, we conclude that the refrigerated portion of the Addition is not a building under the functional test.

87 T.C. 463">*484 Our conclusion is supported by prior decisions of this Court. In 50 T.C. 306">Catron v. Commissioner, supra, we held that the refrigerated storage area of a larger quonset-type structure used in the storing, selection, and packaging of apples was eligible for the investment tax credit as a qualifying 1986 U.S. Tax Ct. LEXIS 62">*105 storage facility under section 48(a)(1)(B)(ii) as then in effect. ¹⁴ In so holding, we determined that the refrigerated area was not a building, notwithstanding the entry and exit of employees on forklifts to store and remove goods, which we found to be merely "incidental, subordinate to, and solely in connection with the qualifying apple storage which was the sole use and purpose of the refrigerated facility." 50 T.C. 306">Catron v. Commissioner, supra at 316.

Catron was followed in Central Citrus Co. v. Commissioner, 58 T.C. 365">58 T.C. 365 (1972), and Merchants Refrigerating Co. of Calif. v. Commissioner, 60 T.C. 856">60 T.C. 856 (1973). In Central Citrus, we held that large, atmospherically controlled "sweet rooms" used in processing citrus fruit were not buildings and further, that they constituted qualifying storage facilities under section 48(a)(1)(B)(ii) as then in effect. ¹⁵ In Merchants Refrigerating, we held that1986 U.S. Tax Ct. LEXIS 62">*106 a large freezer room, which had tilt-up concrete walls and concrete floors and which was used for the storage of frozen foods, was not a building, and that it qualified as a storage facility under section 48(a)(1)(B)(ii) as then in effect. ¹⁶ In each of these cases, we determined that the facilities in question were not buildings because they did not furnish working space and human activity therein was limited. ¹⁷ In Merchants Refrigerating and Catron, the placing in storage and removal of goods by employees on forklifts were specifically found not to constitute the type of "work" or human activity necessary to categorize the facility as a building. 50 T.C. 306">Catron v. Commissioner, supra at 316; 60 T.C. 856">Merchants Refrigerating Co. of Calif. v. Commissioner, supra at 860. ¹⁸1986 U.S. Tax Ct. LEXIS 62">*108 In the 87 T.C. 463">*485 instant case, as in the cited cases, the refrigerated area of the Addition does not furnish working space, and human activity therein is limited; petitioner's employees enter and exit the refrigerated area of the Addition only to store or remove goods, take inventory, and perform occasional repairs and maintenance. We think that the refrigerated1986 U.S. Tax Ct. LEXIS 62">*107 area of the Addition is not fairly distinguishable from those structures held not to be buildings in Catron, Central Citrus and, more particularly, Merchants Refrigerating. ¹⁹ Thus, following our decisions in those cases, we hold that the refrigerated area of the Addition is not a building. ²⁰

1986 U.S. Tax Ct. LEXIS 62">*109 In reaching our conclusion that the refrigerated area of the Addition is not a "building," we have considered, and feel compelled to specifically address, respondent's principal arguments to the contrary.

Respondent argues that the refrigerated portion of the Addition serves as a warehouse used in connection with the distribution of frozen food products and must thus be considered a building. Even if we assume that the Addition functions in some measure as a warehouse, ²¹1986 U.S. Tax Ct. LEXIS 62">*110 we think that, 87 T.C. 463">*486 under the cited decisions, it is not on this account to be considered a building, notwithstanding the provisions of section 1.48-1(e)(1), Income Tax Regs. Indeed, in Merchants Refrigerating, following our decisions in Catron and Central Citrus, we explicitly rejected respondent's contention that a similar refrigerated structure there in issue was a building, even though it was acknowledged to be "plainly a type of warehouse." 60 T.C. 856">Merchants Refrigerating Co. of Calif. v. Commissioner, supra at 859. We adhere to the position expressed in our prior decisions and thus, reject respondent's argument. ²²

Respondent also argues that the Addition, of which the refrigerated area constitutes the largest part, must be considered a building because, in his view, the structure is "reasonably adaptable" 1986 U.S. Tax Ct. LEXIS 62">*111 to other uses. We similarly reject this argument.

As a preliminary matter, it is not clear that the Addition's adaptability to alternate uses is relevant in the instant case in determining whether it is a building. In nearly all the decided cases in this area, any inquiry concerning adaptability has been made only in specific statutory or regulatory contexts not here in issue. Adaptability has been considered, for example, in determining whether a structure is a qualifying storage facility under section 48(a)(1)(B), or a structure which houses other qualifying property as described in section 1.48-1(e)(1)(ii), Income Tax Regs., or a qualifying single purpose agricultural or horticultural structure under section 48(a)(1)(D). ²³1986 U.S. Tax Ct. LEXIS 62">*112 However, 87 T.C. 463">*487 most of the cases which have considered whether a structure is a building have done so by applying the appearance and functional tests, either without considering adaptability, or doing so only where one of the above-cited statutory or regulatory provisions was also at issue. ²⁴

Furthermore, even if we considered adaptability to be a relevant factor in this context, we would still reject respondent's position, since we think that the Addition is not reasonably adaptable to uses other than low temperature storage. Respondent contends that if the refrigeration system were simply switched off, the Addition could be economically 1986 U.S. Tax Ct. LEXIS 62">*113 used as a dry warehouse. However, petitioner provided credible testimony, supported by pro forma financial statements, to show that the Gateway Facility, of which the Addition was a part, could be operated profitably as a refrigerated facility, but would operate at a substantial loss if used as a dry warehouse. We find this evidence to be convincing. At trial, respondent introduced an expert witness 87 T.C. 463">*488 who opined that the Addition is "economically adaptable" to various uses, including a dry warehouse, a trucking terminal, or an indoor racquetball or tennis facility. However, such witness offered no support for this conclusion, and we discern none in the record. ²⁵ Thus, based upon the record before us, we do not think that the refrigerated area of the Addition is economically adaptable to uses other than refrigerated storage.

1986 U.S. Tax Ct. LEXIS 62">*114 Having concluded that the refrigerated area of the Addition is not a "building," ²⁶ we turn now to the issue of whether the refrigerated area is, as petitioner contends, "tangible personal property" under section 48(a)(1)(A), and is thus eligible for the investment tax credit in an amount greater than allowed by respondent. As indicated in our findings of fact, respondent has allowed the credit for certain refrigeration system components of the Addition, including refrigeration pipes and pipe insulation, valves, and motors, having a cost of $ 103,470.12. Thus, the remaining costs for which petitioner is seeking the investment tax credit relate, in essence, to the structural elements of the refrigerated area of the Addition, including its foundation footings, walls, floor, roofing and supports, vapor barrier, insulation, and electrical components allocable thereto, having a cost of $ 404,585. ²⁷ Petitioner bears the burden of proving its entitlement to the claimed credit. See Uecker v. 87 T.C. 463">*489 , 81 T.C. 983">81 T.C. 983, 81 T.C. 983">998 (1983), affd. per curiam on another issue 766 F.2d 909">766 F.2d 909 (5th Cir. 1985); Evans v. Commissioner, 48 T.C. 704">48 T.C. 704, 48 T.C. 704">709 (1967),1986 U.S. Tax Ct. LEXIS 62">*115 affd. per curiam 413 F.2d 1047">413 F.2d 1047 (9th Cir. 1969); Rule 142(a), Tax Court Rules of Practice and Procedure.

Section 48(a)(1)(A), unlike section 48(a)(1)(B), 1986 U.S. Tax Ct. LEXIS 62">*116 generally excludes from its scope not only buildings, but also other inherently permanent structures and their structural components. Compare sec. 1.48-1(c), Income Tax Regs., with sec. 1.48-1(d)(1), Income Tax Regs. See McKenzie v. Commissioner, 85 T.C. 875">85 T.C. 875, 85 T.C. 875">896 (1985). The record does not indicate that the refrigerated area of the Addition is anything but an inherently permanent structure, and petitioner does not argue otherwise. See generally Whiteco Industries, Inc. v. Commissioner, 65 T.C. 664">65 T.C. 664, 65 T.C. 664">672-673 (1975). See also 85 T.C. 875">McKenzie v. Commissioner, supra at 895-897. ²⁸1986 U.S. Tax Ct. LEXIS 62">*119 Accordingly, other than as allowed by respondent, the costs relating to the refrigerated area of the Addition would appear to be ineligible for the investment tax credit by reason of the general rule of section 1.48-1(c), Income Tac Regs., which provides that inherently permanent structures will not qualify as tangible personal property for purposes of section 48(a)(1)(A). However, petitioner relies upon section 1.48-1(c), Income Tax Regs., the penultimate sentence of which provides that, "all property which is in the 1986 U.S. Tax Ct. LEXIS 62">*117 nature of machinery (other than structural components of a building or other inherently permanent structure) shall be considered tangible personal property even though located outside a building." Petitioner argues that, under this provision, property which is in the nature of machinery may qualify as 87 T.C. 463">*490 tangible personal property even if it is inherently permanent. Petitioner asserts that the structural elements of the refrigerated area of the Addition operate together with the refrigeration system to make the refrigerated area function like a giant refrigerator or freezer and contends that the refrigerated area is thus property in the nature of machinery. Petitioner therefore concludes that all the components of the refrigerated area, including the structural elements, are eligible for the investment tax credit as tangible personal property. Respondent acknowledges that, under section 1.48-1(c), Income Tax Regs., property which is in the nature of machinery may qualify as tangible personal property even if it is inherently permanent. ²⁹ However, respondent disagrees with petitioner's characterization of the refrigerated area as property in the nature of machinery and, 1986 U.S. Tax Ct. LEXIS 62">*118 accordingly, disputes the applicability of the cited provision of section 1.48-1(c), Income Tax Regs.

We think that petitioner's position evidences considerable ingenuity. Nevertheless, after serious reflection, we are persuaded for the reasons which follow that it must be rejected. ³⁰

1986 U.S. Tax Ct. LEXIS 62">*120 Petitioner's reliance upon section 1.48-1(c), Income Tax Regs., is based largely upon Weirick v. Commissioner, 62 T.C. 446">62 T.C. 446 (1974), a previous decision of this Court to construe that portion of the cited regulation relating to 87 T.C. 463">*491 property "in the nature of machinery." ³¹ Petitioner contends that, under the rationale of Weirick, the refrigerated area of the Addition must be considered to be property in the nature of machinery within the meaning of section 1.48-1(c), Income Tax Regs. However, we do not consider our decision in Weirick to require a holding for petitioner herein.

1986 U.S. Tax Ct. LEXIS 62">*121 In Weirick, the issue before the Court was whether certain cable support and holddown towers ("line towers") and certain ramps used in the operation of a ski lift were section 38 property. The line towers were placed at various points along the course of the ski lift and served to either support or hold down the lift cable. The ramps were placed at each end of the lift and were either easily moveable wooden platforms or earthen platforms of dirt which had been bulldozed or hauled into place.

We found that the line towers were so affixed to the ground as to be considered "inherently permanent structures." We noted, however, that attached to the towers were sheave assemblies, consisting of four to eight rubber-tired pulleys upon which the lift cable would travel. The line towers had no function other than to support these sheave assemblies, which themselves were concededly property in the nature of machinery. The towers and the sheave assemblies were physically connected, and when replacement was necessary, it was often as economical to replace the tower and its related sheave assembly as to simply replace the sheave assembly on an existing tower. Upon these facts, we determined1986 U.S. Tax Ct. LEXIS 62">*122 that the line towers and the sheave assemblies were so closely related that they could 87 T.C. 463">*492 not properly be considered two separate groups of assets, but rather, formed an inseparable, integral mechanism which was property in the nature of machinery within the meaning of section 1.48-1(c), Income Tax Regs. Accordingly, we held that costs relating to the line towers were eligible for the investment tax credit.

With regard to the ramps at issue in Weirick, we found that the wooden ramps qualified as tangible personal property because they were easily moveable, but that the earthen ramps were improvements to land and as such, were excluded from the definition of tangible personal property under section 1.48-1(c), Income Tax Regs.

It is significant to note that, in Weirick, our inquiry was focused upon the specific items of property in issue, i.e., the ramps and the line towers. We specifically declined to adopt the view that the entire ski lift constituted property in the nature of machinery and to therefore hold that all related components were, as such, tangible personal property under section 1.48-1(c), Income Tax Regs.62 T.C. 446">Weirick v. Commissioner, supra at 455.1986 U.S. Tax Ct. LEXIS 62">*123 Thus, we refused to hold that the wooden and earthen ramps were property in the nature of machinery merely because they were used in connection with the lift. Similarly, we did not hold the line towers to be property in the nature of machinery merely because they were part of the ski lift. Rather, our holding with respect to such towers was based upon their close relationship to the sheave assemblies which, themselves, were property in the nature of machinery.

We believe that in applying the rationale of 62 T.C. 446">Weirick v. Commissioner, supra, to the facts of the instant case, our inquiry must focus, not upon the refrigerated area of the Addition as a whole, but rather, upon the structural elements thereof for which petitioner is seeking an investment tax credit. After considering the record, we do not think that the structural elements of the refrigerated area of the Addition can be said to be property in the nature of machinery. First, the structural elements are fixed in place, and do not themselves serve a "machinery" type function. Moreover, unlike the line towers at issue in Weirick, the structural elements are not so closely related to other 1986 U.S. Tax Ct. LEXIS 62">*124 property as to be considered property in the nature of 87 T.C. 463">*493 machinery. To be sure, the structural elements work in conjunction with the refrigeration system components, which are concededly "property in the nature of machinery," to provide an enclosed, refrigerated space. Nevertheless, unlike the line towers and sheave assemblies in Weirick, we do not find the structural elements to be so closely associated with the refrigeration system as to comprise an integral, single asset. There is, for example, no showing herein, as there was with regard to the line towers and sheave assemblies in Weirick, that, when necessary, it would be as economical to replace both the structural elements and the refrigeration system components as it would be to simply replace the refrigeration system components themselves. Indeed, it appears from the record that the refrigeration system components may be replaced without replacing the structural elements. Moreover, in contrast with the line towers in Weirick, the purpose of the structural elements herein is not simply to support and assist the functioning of other property which is in the nature of machinery. Here, the refrigeration1986 U.S. Tax Ct. LEXIS 62">*125 system can operate independently of the structural elements, and the structural elements themselves serve a function independent of the refrigeration system -- that of keeping out humidity and reducing temperature migration, and providing an enclosed, protected space in which frozen foods may be stored. Thus, we do not think that the structural elements can be said to be so closely related to the refrigeration system as to be considered therewith a single asset which is in the nature of machinery under the rationale of 62 T.C. 446">Weirick v. Commissioner, supra.³²

1986 U.S. Tax Ct. LEXIS 62">*126 Moreover, even if we were to go beyond the approach taken in 62 T.C. 446">Weirick v. Commissioner, supra, by considering the refrigerated area of the Addition as a whole, our conclusion would be the same. The refrigerated area is a fixed, stationary structure. Its primary function is to store frozen 87 T.C. 463">*494 foods at low temperatures. Although it contains, and functions with the aid of, refrigeration system components which are in the nature of machinery, we do not think that the structure's primary function may be thought of as mechanical or accomplished by "machinery" in the ordinary sense of that term. ³³ Thus, we do not think that, considered as a whole, the refrigerated area of the Addition may fairly be characterized as property in the nature of machinery within the meaning of section 1.48-1(c), Income Tax Regs.

1986 U.S. Tax Ct. LEXIS 62">*127 Our conclusion that the refrigerated area is not "tangible personal property" under section 1.48-1(c), Income Tax Regs., and section 48(a)(1)(A) finds support in, and is consistent with, the statutory structure of sections 48(a)(1)(A) and 48(a)(1)(B) and the distinction created therein between "tangible personal property" and "other tangible property." Under section 48(a)(1)(A), "tangible personal property" will be eligible for the investment tax credit, irrespective of whether it is used as an integral part of, or in connection with, a qualifying activity described in section 48(a)(1)(B)(i). See sec. 48(a)(1)(A); sec. 1.48-1(c), Income Tax Regs. Under section 48(a)(1)(B), however, "other tangible property" will qualify for the credit only if it is used as an integral part of, or in connection with, a qualifying activity. See sec. 48(a)(1)(B); sec. 1.48-1(d)(1), Income Tax Regs. It is thus clear that, by requiring that "other tangible property" be used as an integral part of, or in connection with, a qualifying activity under section 48(a)(1)(B), Congress intended to impose additional conditions where the credit is claimed for such property. We think that a large, inherently 1986 U.S. Tax Ct. LEXIS 62">*128 permanent structure such as the refrigerated area of the Addition, which has a concrete foundation, tilt-up concrete walls and a roof, and which comprises approximately 34,650 square feet, is more appropriately categorized, not as "tangible personal property" but rather, as "other tangible property" and, as such, must meet the requirements of section 48(a)(1)(B) in order to be eligible for the investment 87 T.C. 463">*495 tax credit. ³⁴1986 U.S. Tax Ct. LEXIS 62">*130 Petitioner has conceded that the requirements of section 48(a)(1)(B) have not been satisfied, because the refrigerated area of the Addition is not used as an integral part of, or in connection with, a qualifying activity. Nevertheless, petitioner asks us to, in effect, ignore these requirements by classifying the refrigerated area of the Addition as "tangible personal property." We believe that to do so would not only give an impermissibly broad meaning to the term "tangible personal property" but would also frustrate the statutory design of Congress, which requires that "other tangible property" be used as an integral part of or in connection with a qualifying activity in order to be eligible for the investment tax credit. We are, therefore, unwilling 1986 U.S. Tax Ct. LEXIS 62">*129 to construe the language of section 1.48-1(c), Income Tax Regs., pertaining to "property which is in the nature of machinery" so broadly as to bring the refrigerated area of the Addition within the category of "tangible personal property" under section 48(a)(1)(A). ³⁵

87 T.C. 463">*496 1986 U.S. Tax Ct. LEXIS 62">*131 For the foregoing reasons, we reject petitioner's contention that the refrigerated area of the Addition is tangible personal property under section 48(a)(1)(A) and section 1.48-1(c), Income Tax Regs. Accordingly, we hold that petitioner is not entitled to an investment tax credit with respect to the Addition to an extent greater than allowed by respondent.

The second and final issue is whether petitioner is entitled to depreciate the Addition using the 200-percent declining balance method under section 167(b)(2) and an 8-year useful life. Resolution of this issue is dependent upon our holding with respect to the investment tax credit issue, and the parties so recognize. See generally 76 T.C. 609">Samis v. Commissioner, supra at 621.

Section 167(b)(2) generally permits property used in a trade or business or held for the production of income to be depreciated under the declining balance method, with the allowable depreciation not to exceed 200 percent of the amount that would have been allowed if the straight line method had been used. However, under section 167(j)(1)(B), the depreciation allowance under the declining balance method 1986 U.S. Tax Ct. LEXIS 62">*132 is generally limited to 150 percent of the allowable straight line amount if the property in question is section 1250 property. Thus, petitioner may not use the 200-percent declining balance method of depreciation if the Addition is section 1250 property.

Section 1250 property is defined in section 1250(c) as any depreciable real property other than section 1245 property. Section 1245 property is, in turn, defined in section 1245(a)(3) using terms similar to those used in section 48(a)(1) to define section 38 property. Section 1245(a)(3) provides, in relevant part, that section 1245 property is depreciable property which is either --

(A) personal property, [or]

(B) other property (not including a building or its structural components) * * * which * * *

(i) was used as an integral part of manufacturing, production, or extraction or of furnishing transportation, communications, electrical energy, gas, water, or sewage disposal services, or

87 T.C. 463">*497 (ii) constituted a research facility used in connection with any of the activities referred to in clause (i), or

(iii) constituted a facility used in connection with any of the activities referred to in clause (i) for the bulk storage1986 U.S. Tax Ct. LEXIS 62">*133 of fungible commodities * * *

Petitioner contends that the Addition is "personal property" under section 1245(a)(3)(A). ³⁶ Insofar as pertinent herein, the term "personal property" as used in section 1245(a)(3)(A) is defined in section 1.1245-3(b)(1), Income Tax Regs., to mean "tangible personal property" as defined in section 1.48-1(c), Income Tax Regs. As we have held in resolving the investment tax credit issue, neither the truck loading platform, nor the rail loading platform, nor the refrigerated area of the Addition qualifies as tangible personal property under section 1.48-1(c), Income Tax Regs. Since the Addition is not tangible personal property under section 1.48-1(c), Income Tax Regs., and section 48(a)(1)(A), it is also not personal property under section 1.1245-3(b)(1), Income Tax Regs., and section 1245(a)(3)(A). It is, therefore, not section 1245 property, but rather, section 1250 property under section 1250(c). Thus, the provisions of section 167(j)(1)(B) are applicable and, thereunder, allowable depreciation of the Addition under the declining balance method is limited to 150 percent of the amount allowable under the straight line method of depreciation. 1986 U.S. Tax Ct. LEXIS 62">*134 Accordingly, petitioner may not depreciate the Addition using the 200-percent declining balance method of section 167(b)(2).

The 8-year useful life used by petitioner to depreciate the Addition was determined under the Class Life Asset Depreciation Range System, which prescribes certain useful life ranges for various classes 1986 U.S. Tax Ct. LEXIS 62">*135 of depreciable property. See sec. 167(m), sec. 1.167(a)-11; Income Tax Regs. See also Rev. Proc. 72-10, 1972-1 C.B. 721. ³⁷ Under this system, an 8-year useful life may be used in depreciating certain specified 87 T.C. 463">*498 property. However, that period may not be used by petitioner unless the Addition is tangible personal property, and petitioner acknowledges as much. Since we have held that the Addition is not tangible personal property, we also hold that petitioner may not depreciate the Addition using an 8-year useful life. ³⁸

1986 U.S. Tax Ct. LEXIS 62">*136 To reflect concessions and the foregoing,

Decision will be entered under Rule 155.