Additionally, see Staff of the Joint Comm. on Taxation, General Explanation of the Tax Reform Act of 1986, at 90 (J. 109 T.C. 21">*53 Comm. Print 1987), summarizing the prohibition against the component method of depreciation under ACRS as follows: "Component cost recovery was not permitted under ACRS. Thus, the same recovery period and method had to be used for a building as a whole, including all structural components."; see also H. Rept. 99-426, at 138 (1985), 1986-3 C.B. (Vol. 2) 138; S. Rept. 99-313, 99th Cong., 2d Sess. 88 (1986), 1986-3 C.B. (Vol. 3) 88.

We note further that our understanding of the statutory provision comports with the 1997 U.S. Tax Ct. LEXIS 53">*119 construction given that provision in the report relating to the Small Business Job Protection Act of 1996, Pub. L. 104-188, 110 Stat. 1755, ^{391997 U.S. Tax Ct. LEXIS 53">*120} wherein the Senate Finance Committee, in explaining present law relating to depreciation of leasehold improvements, states as follows:

If the improvement is characterized as tangible personal property, ACRS depreciation is calculated using the shorter recovery periods and accelerated methods applicable to such property. The determination of whether certain improvements are characterized as tangible personal property or as nonresidential real property often depends on whether or not the improvements constitute a "structural component" of a building (as defined by Treas. Reg. sec. 1.48-1(e) (1)). See, for example, Metro Natl. Corp. [v. Commissioner], 52 TCM 1440 (1987) [T.C. Memo. 1987-38]; King Radio Corp. [v. United States], 486 F.2d 1091">486 F.2d 1091 (10th Cir. 1973); Mallinckrodt, Inc. [v. Commissioner], 778 F.2d 402">778 F.2d 402 (8th Cir. 1985) [affg. per curiam T.C. Memo. 1984-532] (with respect various leasehold improvements). [S. Rept. 104-281, at 16 n.5 (1996).]

We additionally note that for purposes of ascertaining ACRS recovery periods section 1245 class property has the same definition as personal property described in section 1.48-1(c), Income Tax Regs., which comports with respondent's own interpretation of section 168(f) promulgated in proposed regulations under section 168 issued during 1984. ^{401997 U.S. Tax Ct. LEXIS 53">*121} See 49 Fed. Reg. 5940-5971 (Feb. 16, 1984). Section 1.168-2(e), Proposed 109 T.C. 21">*54 Income Tax Regs., 49 Fed. Reg. 5946 (Feb. 16, 1984), provides in pertinent part as follows "((e) Components and improvements--(1) Component cost recovery not permitted. In general, the unadjusted basis of structural components (as defined in § 1.48-1(e) (2)) of a building must be recovered as a whole. Thus, the same recovery period and method must be used for all structural components, and such components must be recovered as constituent parts of the building of which they are a part. * * *" [Emphasis added.])

Accordingly, we conclude that the precedent that has been developed to ascertain whether property constitutes eligible section 38 property for purposes of ITC is equally applicable to ascertain whether property constitutes section 1245 class property for purposes of ACRS. See also Schrum v. Commissioner, T.C. Memo. 1993-124 (to the extent that property does not qualify as eligible section 38 property under section 48, the property cannot constitute section 1245 class property.)

MACRS

MACRS does not utilize the terms "section 1245class property" or "section 1250class property". ⁴¹ Rather, MACRS assigns property to recovery periods on the basis of class lives. To constitute 5-year property, the disputed property items must have a class 1997 U.S. Tax Ct. LEXIS 53">*122 life of more than 4 years but less than 10 years. Sec. 168(e) (1). To constitute nonresidential real property, the disputed property items must be section 1250 property with a class life of more than 27.5 years. Sec. 168(e) (2).

Section 168(i) (12) provides that "The terms 'section 1245 property' and 'section 1250 property' have the meanings given such terms by sections 1245(a) (3) and 1250(c), respectively." As we discussed supra, section 1250(c) excludes from the term "section 1250 property", "section 1245 property, as defined 1997 U.S. Tax Ct. LEXIS 53">*123 in section 1245(a) (3)".

109 T.C. 21">*55 From that statutory provision, we conclude that, as with ACRS, the MACRS statutory language manifests a congressional intent to retain the prior law distinction between components that constitute section 1250 class property and property items that constitute section 1245 class property. The legislative history of MACRS does not reveal a contrary intention.

In support of the position that an analysis based on ITC is inappropriate for cost recovery purposes, respondent relies on language contained in Grinalds v. Commissioner, T.C. Memo. 1993-66, that "the 'sole justification' test relates to the investment tax credit, which has provisions and policies of its own, and it provides only limited guidance, if any, in interpreting section 168(i) (6), the statute directly involved here." The 'sole justification' test refers to the provision in section 1.48-2(e), Income Tax Regs., which specifically excludes from the definition of a structural component "machinery the sole justification for the installation of which is the fact that such machinery is required to meet temperature or humidity requirements which are essential for the operation of other machinery." Sec. 1.48-2(e), Income Tax Regs.1997 U.S. Tax Ct. LEXIS 53">*124 In Grinalds, we did not focus on the definition of section 1245 class property and section 1250 class property. Therefore that case is distinguishable and inapplicable to the issue of whether tangible property constitutes section 1245 class property or section 1250 class property for purposes of ACRS and MACRS.

Based on the foregoing, we conclude that the tests developed to ascertain whether property constituted tangible personal property for purposes of ITC equally are applicable to decide whether the property constitutes tangible personal property for purposes of MACRS. Accordingly, we conclude that, to the extent a disputed property item would have qualified as tangible personal property for ITC, that property also will qualify as tangible personal property for purposes of ACRS and MACRS.

Additional Arguments

Respondent further contends that the tests developed to decide whether property qualified for ITC are inapplicable to ascertain ACRS recovery classes or MACRS recovery periods because ITC and ACRS and MACRS accomplish their capital 109 T.C. 21">*56 cost incentives in a different manner and focus on different factors. Respondent's arguments in support of that contention are premised on the 1997 U.S. Tax Ct. LEXIS 53">*125 position that the ACRS and MACRS depreciation deductions should be tied to the useful life of the property involved. We rejected a similar position in Simon v. Commissioner, 103 T.C. 247">103 T.C. 247 (1994), affd. 68 F.3d 41">68 F.3d 41 (2d Cir. 1995), and Liddle v. Commissioner, 103 T.C. 285">103 T.C. 285 (1994), affd. 65 F.3d 329">65 F.3d 329 (3d Cir. 1995), and we reject it here.

Other arguments raised by respondent in support of the position that the tests used to ascertain whether property qualifies as tangible personal property for ITC purposes are not applicable for purposes of ACRS and MACRS also are without merit, and we do not address them here.

Respondent contends alternatively that all of the disputed property items are structural components under an ITC analysis and, consequently, constitute section 1250 class property. We now address that alternative position.

Classification of the Disputed Property Items as Section 1245 Class Property or Section 1250 Class Property.

In General

As discussed supra, the classification of disputed property items as section 1245 class property, depreciable over a 5-year recovery period, or section 1250 class property, depreciable over the life of the related structure, depends upon a decision 1997 U.S. Tax Ct. LEXIS 53">*126 as to whether the respective items constitute tangible personal property within the meaning of section 1.48-1(c), Income Tax Regs., which would be section 1245 class property, or structural components of the buildings to which they relate within the meaning of section 1.48-1(e) (2), Income Tax Regs., which would be section 1250 class property. See also secs. 1.1245-3(b)(1), (c), 1.1250-1(e) (3), Income Tax Regs.

Tangible Personal Property

The regulations define tangible personal property to include "any tangible property except land and improvements thereto, such as buildings or other inherently permanent structures (including items which are structural components of such buildings or structures)". Sec. 1.48-1(c), Income Tax Regs.Local law does not control for purposes of determining 109 T.C. 21">*57 whether property is or is not "tangible" or "personal". Id. The term "tangible personal property" is not intended to be defined narrowly and includes assets accessory to the operation of a business. Illinois Cereal Mills, Inc. v. Commissioner, 789 F.2d 1234">789 F.2d 1234, 789 F.2d 1234">1237 (7th Cir. 1986), affg. T.C. Memo. 1983-469; Metro Natl. Corp. v. Commissioner, T.C. Memo. 1987-38; see also S. Rept. 1881, 87th Cong., 2d 1997 U.S. Tax Ct. LEXIS 53">*127 Sess. (1962), 1962-3 C.B. 707, 858; Morrison, Inc. v. Commissioner, T.C. Memo. 1986-129, affd. 891 F.2d 857">891 F.2d 857 (11th Cir. 1990). ⁴²

In Whiteco Indus., Inc. v. Commissioner, 65 T.C. 664">65 T.C. 664, 65 T.C. 664">672-673 (1975), 1997 U.S. Tax Ct. LEXIS 53">*128 we listed the following factors to consider in resolving whether property is inherently permanent and, thus, not tangible personal property within the meaning of section 1.48-1(c), Income Tax Regs.: (1) Is the property capable of being moved, and has it in fact been moved? (2) Is the property designed or constructed to remain permanently in place? (3) Are there circumstances which tend to show the expected or intended length of affixation, i.e., are there circumstances which show that the property may or will have to be moved? (4) How substantial a job is removal of the property and how time-consuming is it? Is it "readily removable"? (5) How much damage will the property sustain upon its removal? and (6) What is the manner of affixation of the property to the land?

Movability itself is not the controlling factor in deciding whether the property lacks permanence. Kramertown Co. v. Commissioner, 488 F.2d 728">488 F.2d 728, 488 F.2d 728">731 (5th Cir. 1974), affg. T.C. Memo. 1972-239; see also Consolidated Freightways v. Commissioner, 708 F.2d 1385">708 F.2d 1385, 708 F.2d 1385">1390 (9th Cir. 1983) (a variety of factors are considered, including, where possible, the function and design of the component in issue, the intent of the taxpayer 1997 U.S. Tax Ct. LEXIS 53">*129 in installing the component, and the effect of removal of the component on the building), affg. in part and 109 T.C. 21">*58 revg. in part 74 T.C. 768">74 T.C. 768 (1980); Everhart v. Commissioner, 61 T.C. 328">61 T.C. 328, 61 T.C. 328">331 (1973) (moveability per se does not determine whether or not property is personal property); Dixie Manor, Inc. v. United States, 44 AFTR 2d 79-5442, 79-2 USTC par. 9469 (W.D. Ky. 1979) (fact that walls often are removed because of a change in design by itself is not sufficient), affd. without published opinion 652 F.2d 57">652 F.2d 57 (6th Cir. 1981). The fact that an item is not readily reusable in another location is evidence supporting the conclusion that it is to be treated as permanent in its present location. Mallinckrodt, Inc. v. Commissioner, 778 F.2d 402">778 F.2d 402, 778 F.2d 402">403 (8th Cir. 1985), affg. per curiam T.C. Memo. 1984-532.

Structural Components

Section 1.48-1(e) (2), Income Tax Regs., explains the meaning of "structural components" by way of example rather than by definition as follows:

(2) The term "structural components" includes such parts of a building as walls, partitions, floors, and ceilings, as well as any permanent coverings therefor such as panelling or tiling; windows and doors; all components (whether 1997 U.S. Tax Ct. LEXIS 53">*130 in, on, or adjacent to the building) of a central air conditioning or heating system, including motors, compressors, pipes and ducts; plumbing and plumbing fixtures, such as sinks and bathtubs; electric wiring and lighting fixtures; chimneys; stairs, escalators, and elevators, including all components thereof; sprinkler systems; fire escapes; and other components relating to the operation or maintenance of a building. However, the term "structural components" does not include machinery the sole justification for the installation of which is the fact that such machinery is required to meet temperature or humidity requirements which are essential for the operation of other machinery or the processing of materials or foodstuffs.

109 T.C. 21">*59 Applying the foregoing general principles, we next consider the appropriate individual categories for the disputed property items. Before we address the substantive issues, however, we must decide an evidentiary matter which was raised at trial.

At trial, petitioners objected to the admission of portions of the report prepared by respondent's expert, Steve Wilgus (Mr. Wilgus), which petitioners contend contains legal conclusions. Respondent contends that the contested materials do not constitute legal conclusions. We took petitioners' objections under advisement.

Testimony of a witness qualified by knowledge, skill, experience, training, or education is admissible whenever that scientific, technical or other specialized knowledge will assist the trier of fact to understand the evidence or to decide a fact in issue. Fed. R. Evid. 702. Testimony that expresses a legal conclusion and does not assist the trier of fact is not admissible. See Heflin v. Stewart County, Tenn., 958 F.2d 709">958 F.2d 709, 958 F.2d 709">715-716 (6th Cir. 1992); Davis v. Combustion Engg., Inc., 742 F.2d 916">742 F.2d 916, 742 F.2d 916">919 (6th Cir. 1984); 1997 U.S. Tax Ct. LEXIS 53">*132 Laureys v. Commissioner, 92 T.C. 101">92 T.C. 101, 92 T.C. 101">126-129 (1989); Weinstein's Federal Evidence, sec. 704.04[2] [a], at 704-10-704-11 (2d ed. 1997); see also Fed. R. Evid. 701, 702; Snap-Drape, Inc. v. Commissioner, 98 F.3d 194">98 F.3d 194, 98 F.3d 194">197-198 (5th Cir. 1996), affg. 105 T.C. 16">105 T.C. 16 (1995); Berry v. City of Detroit, 25 F.3d 1342">25 F.3d 1342, 25 F.3d 1342">1353-1354 (6th Cir. 1994); Molecular Tech. Corp. v. Valentine, 925 F.2d 910">925 F.2d 910, 925 F.2d 910">919 (6th Cir. 1991); Adalman v. Baker, Watts & Co., 807 F.2d 359">807 F.2d 359, 807 F.2d 359">365-368 (4th Cir. 1986). ⁴³

We conclude that Mr. Wilgus' report states legal conclusions applying law to facts and that those legal conclusion are not helpful to the Court. Consequently, we disregard them. ⁴⁴

Additionally, in support of their respective positions, the parties presented expert testimony at trial and in reports concerning the nature of the disputed property items. Expert testimony may be in the form of an opinion or in the expression of a dissertation or exposition of scientific or other principles relevant 1997 U.S. Tax Ct. LEXIS 53">*133 to the case, which the finder of fact may apply to the facts. Fed. R. Evid. 702, advisory comm. note, 28 109 T.C. 21">*60 U.S.C. App. at 8871 (1994). Opinion testimony of an expert not supported by an adequate foundation of relevant facts, data, or opinions, however, is inadmissible conjecture or speculation. See Randolph v. Laeisz, 896 F.2d 964">896 F.2d 964, 896 F.2d 964">967-968 (5th Cir. 1990); Twin City Plaza, Inc. v. Central Sur. & Ins. Corp., 409 F.2d 1195">409 F.2d 1195, 409 F.2d 1195">1200 (8th Cir. 1969); Graham, Federal Practice and Procedure, sec. 6641, at 251-252 (Interim ed. 1992). An expert may base an opinion or inference on facts that the expert knows from first hand observation, that are in the record and made known to the expert, or that, although not in the record, are "of a type reasonably relied upon by experts in the particular field in forming opinions or inferences upon the subject." Fed. R. Evid. 703; see also Ramsey v. Culpepper, 738 F.2d 1092">738 F.2d 1092, 738 F.2d 1092">1101 (10th Cir. 1984); In re Aircrash in Bali, Indonesia on April 22, 1974, 684 F.2d 1301">684 F.2d 1301, 684 F.2d 1301">1314 (9th Cir. 1982); Baumholser v. Amax Coal Co., 630 F.2d 550">630 F.2d 550, 630 F.2d 550">552-553 (7th Cir. 1980).

Although otherwise inadmissible data underlying an expert's opinion may be admitted at trial, the use of that 1997 U.S. Tax Ct. LEXIS 53">*134 data is limited to explaining the expert's reasoning, and is not admitted as substantive evidence. Fed. R. Evid. 703, 705; Engebretsen v. Fairchild Aircraft Corp., 21 F.3d 721">21 F.3d 721, 21 F.3d 721">728-729 (6th Cir. 1994); United States v. Wright, 783 F.2d 1091">783 F.2d 1091, 783 F.2d 1091">1100 (D.C. Cir. 1986); Paddack v. Dave Christensen, Inc., 745 F.2d 1254">745 F.2d 1254, 745 F.2d 1254">1261-1262 (9th Cir. 1984). Factual allegations that are not otherwise in the record that are relied upon by an expert witness may be admitted as substantive evidence only if proper foundational requirements are satisfied; i.e., where the expert testifies from personal knowledge of the facts relayed. See Fed. R. Evid. 602. Accordingly, to the extent that the testimony of an expert states factual allegations that are not otherwise properly in the record, i.e., no foundation was laid establishing that the witness had an opportunity to observe and actually did observe the fact to which the witness testified, we disregard such testimony.

Although we have considered and given due weight to the conclusions of the experts, we do not set forth infra those conclusions except where we believe it will help explain our rationale for finding that a specific disputed property item constitutes 1997 U.S. Tax Ct. LEXIS 53">*135 personal property or a structural component. We turn next to consideration of the appropriate categories for the disputed items.

109 T.C. 21">*61 1. ⁴⁵Primary and Secondary Electrical Distribution Systems

The primary and secondary electrical distribution systems (Property Unit 1900) include the main panels, main motor control centers, transformers, the secondary distribution panels, and related wiring and conduit. See supra pp. 9-12. The parties have stipulated to the portion of the electrical load conveyed by the primary and secondary electrical distribution systems to hospital equipment and to the portion conveyed to items related to the operation and maintenance of petitioners' buildings. See supra p. 12.

Petitioners contend that the portion of the primary and secondary electrical distribution systems which carry electrical loads to particular items of business equipment constitutes section 1245 class property within the meaning of sections 1.48-1(c) and 1.1245-3(b), Income Tax Regs., because that portion of the electrical distribution systems 1997 U.S. Tax Ct. LEXIS 53">*136 does not relate to the operation or maintenance of a building. Respondent counters that those disputed property items are structural components of the buildings to which they relate because they are inherently permanent and are not readily removable.

Respondent agrees that our decision in Morrison, Inc. v. Commissioner, supra, as affirmed by the Court of Appeals for the Eleventh Circuit, provides authority for petitioners' position that the primary and secondary electrical distribution systems are not structural components to the extent of the load percentages that the parties stipulated are carried to equipment. Our holding in Morrison follows our holding in Scott Paper Co. v. Commissioner, 74 T.C. 137">74 T.C. 137, 74 T.C. 137">186-187 (1980), that the portion of the taxpayer's primary electrical distribution system which did not relate to the overall operation or maintenance of buildings constituted tangible personal property under section 48(a)(1)(A) and therefore was eligible for ITC. Respondent, however, urges the Court to disavow 74 T.C. 137">Scott Paper Co. v. Commissioner, supra, and its progeny, and instead to follow the reasoning of A.C. Monk & Co. v. United States, 686 F.2d 1058">686 F.2d 1058, 686 F.2d 1058">1065-1066 (4th Cir. 1982) (no 1997 U.S. Tax Ct. LEXIS 53">*137 justification for allocating portions of a single 109 T.C. 21">*62 electrical system; components of electrical system are structural components if they can be reasonably adapted to general uses), or of Illinois Cereal Mills, Inc. v. Commissioner, 789 F.2d 1234">789 F.2d at 1244 (electrical distribution system was "other tangible property" under section 48(a)(1)(B)). ^{461997 U.S. Tax Ct. LEXIS 53">*138}

Respondent contends further that the disputed property items in the subject category are distinguishable from the primary and secondary electrical distribution property items involved in 74 T.C. 137">Scott Paper Co. v. Commissioner, supra, because in that case the electrical components were readily removable, they were not inherently permanent, they were inextricably 1997 U.S. Tax Ct. LEXIS 53">*139 linked to and installed in conjunction with the addition of particular pieces of machinery, and most of the electricity carried by the electrical components was conveyed to the new equipment.

In Morrison, Inc. v. Commissioner, T.C. Memo. 1986-129, we explained our rationale for finding a portion of the primary and secondary electrical system in Scott Paper Co. eligible property for ITC as follows:

In Scott Paper Co., we concluded that the components of the taxpayer's primary electric system which supplied the electric needs of process machinery rather than contributing to the overall operation or maintenance of buildings, was not an inherently permanent structure and the taxpayers were entitled to the investment tax credit on these components. In reaching this conclusion we placed great emphasis on the language in section 1.48-1(e)(2), Income Tax Regs., which defines "structural components" by listing examples and including as the last line of the regulation "and other 109 T.C. 21">*63 components relating to the operation or maintenance of a building." In 74 T.C. 137">Scott Paper Co., supra at 183, we characterized that phrase as follows:

We also quoted the Technical Explanations of the Revenue Act of 1962 which explained the language which was incorporated in the regulation as follows:

In accordance, we concluded that property fails to qualify for the credit if it relates to the overall operation or maintenance of a building rather than being used to aid in the employment of a particular function or particular piece of property. See Central Citrus Co. v. Commissioner, 58 T.C. 365">58 T.C. 365, 58 T.C. 365">374 (1972).

We focused on the ultimate uses of power 1997 U.S. Tax Ct. LEXIS 53">*141 at the taxpayer's facility in Scott Paper Co. and distinguished the power used in the overall operation or maintenance such as lighting, heating, ventilation and air-conditioning of the building and the power used to operate the taxpayer's machinery. 74 T.C. 137">Scott Paper Co. v. Commissioner, supra at 183-184. We thus concluded in Scott Paper Co. that:

We find no material differences between the facts in the instant case and those facts present in 74 T.C. 137">Scott Paper Co. v. Commissioner, supra, and Morrison, Inc. v. Commissioner, supra, relating to the primary and electrical distribution systems. For the reasons previous articulated in both of those case, we conclude that the portion of the cost of the primary and secondary electrical distribution systems in petitioners' 1997 U.S. Tax Ct. LEXIS 53">*142 hospitals which is equal to the percentage of the electrical load carried to those systems allocable to the hospitals' equipment, as stipulated by the parties, constitutes section 109 T.C. 21">*64 1245 class property, depreciable over a 5-year recovery period.

2. Branch Electrical Wiring and Connections and Special Electrical Equipment

The branch electrical wiring and connections (hereinafter branch wiring) relate to several items of hospital equipment and are contained in many different property units including controls, battery packs, and battery chargers for the emergency power generation systems (Property Unit 2200); x-ray film processing equipment (Property Unit 2244); illuminated emergency entrance signs and illuminated hospital front entrance signs (Property Unit 2320); medical gas control equipment and medical gas alarm equipment (Property Unit 3026); hospital kitchen equipment (Property Unit 3075); equipment located in the hospital laboratory and maintenance shop areas (Property Unit 3195); synchronously wired clock systems (Property Unit 3280); air conditioners located in the hospital computer rooms (Property Unit 3292); hospital central sterilization equipment (Property Unit 3298); items 1997 U.S. Tax Ct. LEXIS 53">*143 of hospital equipment located in the operating rooms, recovery rooms, intensive care units, infant nurseries, radiology areas, patient rooms, laboratories, and kitchens (Property Unit 4040). See supra pp. 12-15.

The parties have stipulated that 100 percent of the electrical load carried by the branch wiring relating to the controls, battery packs, and battery chargers for the emergency power generation systems, the x-ray film processing equipment, the illuminated emergency entrance signs and the illuminated hospital front entrance signs, the medical gas control equipment and medical gas alarm equipment, the synchronously wired clock systems, the air conditioners located in the hospital computer rooms, and the hospital central sterilization equipment, is conveyed to the particular items of equipment to which they relate. The parties agree further that the branch wiring is necessary and required for the operation and use of the items to which they relate and, during the years in issue, was used only with those items. The parties additionally have stipulated that all of the electrical receptacles in dispute are used to provide localized electrical service for specific items of equipment 1997 U.S. Tax Ct. LEXIS 53">*144 located in the kitchens, 109 T.C. 21">*65 patient rooms, laboratories, and maintenance shop areas of petitioners' hospitals, which equipment respondent agrees is 5-year personal property. We refer to the branch wiring and special electrical equipment in issue in the subject category collectively as the branch electrical systems.

Petitioners contend that the branch electrical systems are section 1245 class property pursuant to the reasoning of Scott Paper Co. v. Commissioner, 74 T.C. 137">74 T.C. 137 (1980), and its progeny, as well as Rev. Rul. 66-299, 1966-2 C.B. 14. ^{471997 U.S. Tax Ct. LEXIS 53">*145} Petitioners contend that the parties agree that virtually every item to which the branch wiring relates was appropriately classified as section 1245 class property.

Respondent, however, contends that the disputed property items in the subject category are inherently permanent and are identified as a structural component (electric wiring) in section 1.48-1(e)(2), Income Tax Regs. On brief, respondent segregates the disputed property items into individual segments of conduit, electrical wiring, junction boxes, outlets, and receptacles. Respondent contends that the conduit is designed to remain in place throughout its expected useful life, is identical to other conduit which petitioners have agreed is a structural component, and is typical of electrical conduit used at other commercial establishments. Respondent contends that the electrical wiring is not designed or installed with a particular piece of equipment, is not easily removable, and is not 1997 U.S. Tax Ct. LEXIS 53">*146 economically practicable to reuse. Respondent contends that none of the electrical outlets, receptacles, and junction boxes are inextricably linked to specific items of machinery, they are not moved, they are typical of outlets, receptacles, and junction boxes used in commercial facilities, and they relate to the operation of the buildings in that they provide points for the provision of power for many property items including employee radios in the laboratories and power tools in the shop areas.

109 T.C. 21">*66 As we understand respondent's position, respondent agrees that the disputed property items in the subject category are necessary for, and used exclusively with, the operation of various items of equipment. Nevertheless, respondent contends that the branch electrical systems are structural components because they were not designed for or installed with the specific equipment to which they relate, they are adaptable for other purposes, are composed of standard electrical supplies, have useful lives not inextricably linked to the specific equipment with which they are used, and are not readily removable. Additionally, with regard to the electrical outlets, receptacles, and junction boxes located 1997 U.S. Tax Ct. LEXIS 53">*147 in laboratory and shop areas, respondent asserts that those disputed property items may be used to power nonhospital equipment or equipment relating to the operation or maintenance of the buildings. To decide whether the disputed property items in the subject category constitute personal property or structural components of the buildings to which they relate, we apply the reasoning in 74 T.C. 137">Scott Paper Co. v. Commissioner, supra, and cases following its rationale.

In Scott Paper Co. v. Commissioner, 74 T.C. 137">74 T.C. 182-183, we noted that even though section 1.48-1(e)(2), Income Tax Regs., lists items such as "wiring and lighting fixtures" in describing structural components, to constitute a structural component of a building, the item nonetheless must relate to the operation or maintenance of the building. Subsequently, in Morrison, Inc. v. Commissioner, T.C. Memo. 1986-129, we found that much of the electrical distribution systems constituted personal property. We stated:

Respondent points out that the reasonable adaptability of the electrical distribution system with minimal effort to accommodate another cafeteria, a restaurant or a retail sales establishment such as a furniture store, indicates 1997 U.S. Tax Ct. LEXIS 53">*148 that the system relates to the overall operation or maintenance of the building rather than relating to the function of specific pieces of kitchen machinery or equipment. Respondent recognizes that his argument is contrary to our holding in 74 T.C. 137">Scott Paper Co., supra.Following our holding in Scott Paper Co. v. Commissioner, 74 T.C. 137">74 T.C. 137, 74 T.C. 137">184 (1980), we focus on the ultimate use of the electrical power in petitioners' cafeterias in order to determine whether the electrical distribution system constitutes a structural component. An allocation should then be made based on the qualifying and nonqualifying uses of the power.

109 T.C. 21">*67 Similarly, in Duaine v. Commissioner, T.C. Memo. 1985-39, we analyzed various items of property contained in a fast food restaurant to determine whether they qualified for ITC. We followed the reasoning of 74 T.C. 137">Scott Paper Co. v. Commissioner, supra, in finding that electrical outlets and conduits that provided localized power sources for the lessee's specialized restaurant equipment constituted personal property.

In Rev. Rul. 66-299, 1966-2 C.B. at 16, respondent concluded that:

special electrical or plumbing connections which are necessary to and are used directly with a specific 1997 U.S. Tax Ct. LEXIS 53">*149 item of machinery or equipment, or between specific items of individual, machinery or equipment, are not structural components of the building, but are essentially items of machinery or equipment, and qualify as section 38 property for investment credit purposes.

Respondent argues that the disputed property items comprising the branch electrical systems are not identical to the primary and secondary electrical systems involved in 74 T.C. 137">Scott Paper Co. v. Commissioner, supra, 1997 U.S. Tax Ct. LEXIS 53">*150 and Morrison, Inc. v. Commissioner, supra, or to the electrical connections involved in Duaine v. Commissioner, supra, or to the "special electrical or plumbing connections" described in 58 T.C. 365">Central Citrus Co. v. Commissioner, supra, and Rev. Rul. 66-299, supra. We, however, conclude that there are no material differences among those items and the disputed property items in the subject category.

Respondent argues further that the wiring and conduit located in the walls or floors of the hospitals are inherently 109 T.C. 21">*68 permanent because they are not movable. Movability, however, is not the sole determinant as to what constitutes section 1245 personal property. Kramertown Co. v. Commissioner, 488 F.2d 728">488 F.2d at 731; Consolidated Freightways v. Commissioner, 708 F.2d 1385">708 F.2d at 1390; Everhart v. Commissioner, 61 T.C. 328">61 T.C. 331; Dixie Manor, Inc. v. United States, 44 AFTR 2d at 79-5444 to 79-5446, 79-2 USTC par. 9469. The fact that some of the wiring and conduit is contained in the walls and floors of the hospitals is not relevant in determining whether those items are personal property. We look to the ultimate use of the electrical power conveyed by the branch electrical systems to decide whether the disputed property 1997 U.S. Tax Ct. LEXIS 53">*151 items constitute structural components or personal property. 74 T.C. 137">Scott Paper Co. v. Commissioner, supra; Morrison, Inc. v. Commissioner, supra.

From the foregoing, we learn that a disputed property item constitutes a structural component to the extent that it furnishes electrical power for a function or equipment that relates to the operation or maintenance of a building. Conversely, to the extent that a disputed property item furnishes electrical power for a function or equipment that does not relate to the operation or maintenance of a building, the disputed property item constitutes tangible personal property. 74 T.C. 137">Scott Paper Co. v. Commissioner, supra;58 T.C. 365">Central Citrus Co. v. Commissioner, supra; see also Texas Instruments, Inc. v. Commissioner, supra; Morrison, Inc. v. Commissioner, supra; Duaine v. Commissioner, supra.

The x-ray film processing equipment (Property Unit 2244), medical gas control equipment and medical gas alarm equipment (Property Unit 3026), and hospital central sterilization equipment (Property Unit 3298) aid in the rendition of healthcare services and, therefore, the branch electrical systems relating to that equipment do not relate to the operation or maintenance of 1997 U.S. Tax Ct. LEXIS 53">*152 the buildings. Branch electrical systems relating to items of hospital equipment located in the operating room, recovery room, intensive care units, infant nurseries, radiology areas, patient rooms, laboratories, and kitchens (Property Unit 4040) also are property items related to furnishing medical services rather than to providing building services. Accordingly, we hold that the branch electrical systems relating to Property Units 2244, 3026, 3298, and 109 T.C. 21">*69 4040 constitute tangible personal property, and that they are depreciable over a 5-year recovery period.

The parties agree that the emergency generator (Property Unit 2200) and emergency entrance signs and illuminated hospital front entrance signs (Property Unit 2320) are 5-year property. In our view, those items, as well as the hospital kitchen equipment (Property Unit 3075), constitute assets accessory to the conduct of petitioners' healthcare business, within the meaning of S. Rept. 1881, 87th Cong., 2d Sess. (1962), supra, 1962-3 C.B. 707, 722, and, consequently, they do not relate to the operation or maintenance of the buildings. See Morrison, Inc. v. Commissioner, supra (emergency lighting qualifies as asset accessory to a 1997 U.S. Tax Ct. LEXIS 53">*153 business); S. Rept. 95-1263, at 117 (1978), supra, 1978-3 C.B. (Vol. 1) 315, 415 ^{481997 U.S. Tax Ct. LEXIS 53">*154 1997 U.S. Tax Ct. LEXIS 53">*155} (special lighting, identity symbols, and signs (except billboards) are tangible personal property). The parties agree further that the computer-room air conditioners (Property Unit 3292) are 5-year property, presumably because they satisfy the "sole justification" test of section 1.48-1(e)(2), Income Tax Regs, ⁴⁹ and they consequently also would not relate to the operation or maintenance of the buildings. See Piggly Wiggly S., Inc. v. Commissioner, 84 T.C. 739">84 T.C. 748-756 (HVAC units installed to 109 T.C. 21">*70 meet temperature and humidity requirements of refrigeration equipment of grocery stores qualify as tangible personal property). The branch electrical systems relating to those items of equipment similarly do not relate to the operation or maintenance of petitioners' buildings. Accordingly, we hold that the branch electrical systems relating to Property Units 2200, 2320, 3292, and 3075 also constitute tangible personal property, and that they are depreciable over a 5-year recovery period.

The subject category also includes synchronously wired clock systems (Property Unit 3280). Petitioners' 1997 U.S. Tax Ct. LEXIS 53">*156 expert, William J. Neiman (Mr. Neiman), states that the clock system, located throughout the hospital, includes clocks, timers, and personnel time recorders that insure continuity in timekeeping. He explains that the clock system is not found in most buildings but typically only in facilities where the routine nature and regularity of medical procedures is inherent to the business of the facility. Mr. Neiman further states that the timekeeping system is necessary for monitoring the duration and frequency of patient symptoms and timing the administration of medical treatments. Respondent's expert, Stephen A. Wilgus, discussed the conduit, wiring, and electrical outlets comprising the branch electrical systems, but he did not address the classes of assets to which the disputed property items relate. Although it seems that synchronized timekeeping systems are not unique to the healthcare business, we conclude that the synchronized clocks relate to the operations carried on within petitioners' buildings and not to the operation or maintenance of petitioners' buildings. Consequently, we hold that the branch electrical systems relating to the synchronized clocks also constitute personal 1997 U.S. Tax Ct. LEXIS 53">*157 property and that they also are depreciable over a 5-year recovery period.

Lastly, the subject category includes electrical outlets, receptacles, and junction boxes located in laboratory and shop areas. To the extent that they are used to power employee personal equipment or equipment relating to the operation or maintenance of the buildings, they do not constitute personal property. Rather, they are structural components of the buildings. To the extent that they are used to power equipment that is not employee owned or that does not relate to the operation or maintenance of petitioners' 109 T.C. 21">*71 buildings, however, they do constitute personal property. Petitioners, however, have not produced evidence demonstrating which electrical outlets, receptacles, and junction boxes are used for a qualified purpose, and we have no basis to make that determination. Accordingly, we sustain respondent's determination that those disputed property items must be depreciated over the same recovery period as the building to which they relate.

3. Wiring and Related Property Items Relating to Television Equipment

The disputed property items in the subject category (Property Unit 2340) consist of wiring and related 1997 U.S. Tax Ct. LEXIS 53">*158 property items that relate to the television antennae and television sets located in the hospitals. See 105 T.C. 16">supra pp. 16-17.

Petitioners contend that the branch wiring relating to the television equipment is section 1245 class property, depreciable over 5-year periods, pursuant to the reasoning of 74 T.C. 137">Scott Paper Co. v. Commissioner, supra, and its progeny, as well as Rev. Rul. 66-299, 1966-2 C.B. 14. Respondent contends that the disputed property items in the subject category are inherently permanent and are identified as a structural component (electric wiring) in section 1.48-1(e)(2), Income Tax Regs. The parties agree that the master television antennae are 5-year property.

We conclude for the reasons discussed supra relating to the branch electrical systems that the branch wiring in the subject category constitutes assets accessory to the conduct of petitioners' healthcare business within the meaning of S. Rept. 1881 supra, 1962-3 C.B. at 722. The disputed property items in the subject category do not relate to the operation or maintenance of the buildings. Consequently, we hold that the wiring and related property in Property Unit 2340 constitute tangible personal property, depreciable 1997 U.S. Tax Ct. LEXIS 53">*159 over a 5-year recovery period.

109 T.C. 21">*72 4-5. Conduit, Floor Boxes, Power Boxes and Outlet Jacks Relating to Telephone Equipment and Electrical Wiring, Conduit, and Connections Relating to Internal Communications Equipment

The telephone equipment in the subject categories (Property Unit 2330) includes conduit installed specifically to house the telephone wiring, telephone floor boxes, telephone power boxes, and telephone outlet jacks, which cannot be used for any purpose other than as a connection point for petitioners' telephones. See 105 T.C. 16">supra p. 17. Respondent agrees that those items are required for the use and operation of the telephones in petitioners' hospitals and, during the years in issue, were used only with the telephones and telephone equipment located in the hospitals.

The internal communications equipment in dispute (Property Unit 3090) consists of wiring and conduit, junction boxes, outlets, and sleeves that are necessary for the operation of the hospital intercom, dictation, paging, and nurse call systems. See 105 T.C. 16">supra pp. 17-18. During years ended 1985 through 1988, those items were used only with those particular systems, and the hospital blueprints indicate that the items are to 1997 U.S. Tax Ct. LEXIS 53">*160 be used specifically with those systems.

Respondent agrees that the telephone enclosures are properly classified as personal property, but contends that the conduit, floor boxes, power boxes, and outlets that are necessary for petitioners to use the telephones and the enclosures constitute structural components of a building. We do not agree.

The electrical connections in the subject categories are necessary for the operation of telephones and internal communications equipment and are used directly with the equipment to which they relate, and, consequently, they are considered a part of that equipment. 74 T.C. 137">Scott Paper Co. v. Commissioner, supra;Morrison, Inc. v. Commissioner, T.C. Memo. 1980-129. Accordingly, we hold that the disputed property items in Property Units 230 and 3090 constitute personal property and are depreciable over 5-year periods.

6. Carpeting

The carpeting (Property Unit 2140) was installed in the hospital facilities during construction. See 105 T.C. 16">supra p. 18. It was 109 T.C. 21">*73 attached to the floors of the hospitals using a general purpose latex adhesive. Most of the carpeting already has been removed.

Petitioners contend that the carpeting was not a structural component of petitioners' 1997 U.S. Tax Ct. LEXIS 53">*161 hospital buildings within the meaning of section 1.48-1(e)(2), Income Tax Regs. Petitioners contend that the carpeting was easily removed, its removal did not damage the concrete floors of the hospitals, and that, if necessary, the carpeting could have been reinstalled in other locations with new adhesives. Additionally, petitioners contend that the carpeting was not an integral part of, or a permanent covering for, the hospital floors. Petitioners further contend that section 1.48-1(e)(2), Income Tax Regs., does not list carpeting as a structural component of a building. Accordingly, petitioners contend, the carpeting must be an integral part of, and a permanent covering for, the concrete floors of petitioners' hospitals to constitute a structural component of a building under section 1.48-1(e)(2), Income Tax Regs.

Respondent contends that the carpeting constitutes a structural component. Respondent maintains that the carpet is typical of carpeting used in other business and professional facilities, is custom cut, is attached to the concrete flooring by adhesives, is designed to remain in place until its useful life is exhausted, provides a minimally acceptable floor finish, would 1997 U.S. Tax Ct. LEXIS 53">*162 be damaged on removal, and is not reusable except for scrap purposes.

Petitioners counter that the carpeting in all material respects is indistinguishable from the wall-to-wall carpeting installed in guest rooms, office space, bar areas, and dining rooms of a motel described in Rev. Rul. 67-349, 1967-2 C.B. 48. In that Revenue Ruling, respondent ruled that the carpeting was personal property for purposes of section 1.48-1(c), Income Tax Regs., and not a structural component of a building.

The carpeting described in Rev. Rul. 67-349 was fastened with hooks attached to wood strips that were nailed along each wall. Rev. Rul. 67-349, 1967-2 C.B. at 48. In holding that the carpeting, installed over concrete floors, constituted personal property, respondent explained:

109 T.C. 21">*74 The "wall-to-wall" carpeting installed in a building in the manner described above is not an integral part of the floor itself, and therefore, the carpeting is not a permanent covering for the floor. Thus, the "wall-to-wall" carpeting in the instant case is not a "structural component" within the meaning of the regulations. [Rev. Rul. 67-349, 1967-2 C.B. at 49.]

Respondent contends that the carpeting involved in the instant 1997 U.S. Tax Ct. LEXIS 53">*163 case is distinguishable from the carpeting described in Rev. Rul. 67-349, supra, because it is more permanent, is installed directly on an unsealed concrete slab by adhesive, and is not reusable. Petitioners counter that S. Rept. 95-1263, supra, 1978-3 C.B. (Vol. 1) at 415, see supra note 48, expressly and unequivocally recognized that all carpeting is personal property and is not to be considered a structural component of a building.

Respondent contends, however, that the record does not show that the carpeting involved in the instant case was installed with adhesives designed to ease its removal as was the situation in the example reflected in S. Rept. 95-1263, supra. Respondent relies on Minot Fed. Sav. & Loan Association v. United States, 313 F. Supp. 294">313 F. Supp. 294, 313 F. Supp. 294">296 (D.N.D. 1970), affd. 435 F.2d 1368">435 F.2d 1368 (8th Cir. 1970), wherein the District Court stated:

Carpeting is now considered a permanent covering and one of the recognized methods of permanently finishing floors for use. A finished floor, or permanent finished floor covering, is essential for the proper and necessary operation and maintenance of a building.

We conclude that the carpeting involved in the subject category is not materially 1997 U.S. Tax Ct. LEXIS 53">*164 different from the carpeting described in Rev. Rul. 67-349, supra. We are persuaded from the record that the carpeting is not an integral part of the floor and satisfies the criteria for tangible personal property outlined in Whiteco Indus., Inc. v. Commissioner, 65 T.C. 664">65 T.C. 672-673. Petitioners have shown that they did not intend for the carpeting to be permanently affixed to the underlying floor and that much of the carpeting already has been removed. The carpeting was attached with adhesives that facilitate ease of removal, and, although the carpeting could have been reused in another location, it was discarded because of potential health hazards resulting from its placement in hospital buildings.

109 T.C. 21">*75 Respondent's reliance on 313 F. Supp. 294">Minot Fed. Sav. & Loan Association v. United States, supra, is misplaced. Carpeting was not in issue in Minot. In the passage quoted above and cited by respondent, the District Court admonished the Government for taking an inconsistent and contrary position (that removable partitions were structural components) from the principles and rationale of Rev. Rul. 67-349 (that "wall-to-wall" carpeting was tangible personal property). The District Court did not find that 1997 U.S. Tax Ct. LEXIS 53">*165 carpeting per se constitutes a structural component. The Minot case, furthermore, predates the Senate Finance Committee report for the 1978 Revenue Act wherein carpeting specifically is identified as tangible personal property. S. Rept. 95-1263, 1978-3 C.B. (Vol. 1) at 415.

Based on the foregoing, we hold that the carpeting in the subject category constitutes tangible personal property and that it is depreciable over a 5-year recovery period.

7. Vinyl Wall Coverings

The vinyl wall coverings (Property Unit 2380) in the subject category are the original vinyl wall coverings placed in petitioners' facilities during construction. See 105 T.C. 16">supra p. 19.

Petitioners contend that the vinyl wall coverings are not structural components of petitioners' buildings, but are section 1245 class property used in petitioners' businesses and that they are depreciable over 5-year periods. Respondent contends that the vinyl wall coverings are structural components of the buildings. Respondent maintains that the vinyl wall coverings are an alternative for paint, they are intended to remain on the walls during the useful life of the wall coverings, and they are not readily removable or reusable.

Section 1.48-1(e)(2), Income Tax Regs., 1997 U.S. Tax Ct. LEXIS 53">*166 includes as an example of a structural component walls and permanent coverings for them. Petitioners contend that the vinyl wall coverings are not intended or designed to be either integral parts of, or permanent coverings for, the walls of petitioners' hospitals, but are decorative coverings for those walls. They are easily removable, and in most instances, due to changes in the decor of the hospitals and heavy wear, the vinyl wall coverings already have been removed without damage to the walls of the hospitals. Petitioners concede that wall coverings 109 T.C. 21">*76 typically are not reused in their entirety upon removal, but assert that portions of the vinyl wall coverings could be removed in connection with area repair work and then reattached to the walls. Petitioners contend that they used adhesives to attach the vinyl wall coverings to the walls, and that method of attachment is expressly recognized as being non-permanent in S. Rept. 95-1263, 1978-3 C.B. (Vol. 1) at 415 (see supra note 48). Petitioners contend that the decorative nature of the vinyl wall coverings and the fact that "glue-sizing" was applied to the sheetrock walls prior to placing the wall coverings on the walls also indicate 1997 U.S. Tax Ct. LEXIS 53">*167 that they were intended to be temporary. Petitioners contend that the vinyl wall coverings are similar to the lattice millwork in issue in Morrison, Inc. v. Commissioner, supra, because they are "merely decorative ornamentation serving no more than an incidental relationship to the operation or maintenance of the building" and "could easily be removed without permanently damaging the * * * walls". Id.

In Standard Oil Co. (Ind.) v. Commissioner, 77 T.C. 349">77 T.C. 349, 77 T.C. 349">405 (1981) (involving the eligibility for ITC of new service station signs and lights), we stated that, for purposes of section 48(a)(1), "all tangible property constitutes 'tangible personal property' unless it is excluded because it is land or an 'inherently permanent structure.'" See also sec. 1.48-1(c), Income Tax Regs. To decide whether the service station signs and lights constituted an inherently permanent structure, we applied the criteria announced in Whiteco Indus., Inc. v. Commissioner, 65 T.C. 664">65 T.C. 671. 77 T.C. 349">Standard Oil Co. (Ind.) v. Commissioner, supra.

Additionally, in Duaine v. Commissioner, T.C. Memo. 1985-39, for the purpose of deciding whether wall and floor tiles in a building leased to a fast food restaurant constituted 1997 U.S. Tax Ct. LEXIS 53">*168 inherently permanent structures, we applied the Whiteco criteria. In Duaine, we held that, because the tiles were glued to the surfaces on which they were installed and because a building's interior tiling was included specifically as a structural component in section 1.48-1(e)(2), Income Tax Regs., the tiles were a permanent covering for the restaurant's walls and floors. Id.

In contrast, we are persuaded that the vinyl wall coverings involved in the subject category were not intended to be, and were not, a permanent covering for the hospital walls. The 109 T.C. 21">*77 walls were prepared with glue sizing to permit easy removal of the vinyl wall coverings without damage to the walls. The vinyl wall coverings were attached with adhesives that also permitted easy removal. Indeed, much of the wall coverings was removed within 8 years of installation without significant damage to the walls or to the wall coverings.

Accordingly, we hold that the vinyl wall coverings in the subject category constitute tangible personal property, and that they are depreciable over a 5-year recovery period.

8. Vinyl Floor Coverings

The vinyl floor coverings and matching base cove molding (Property Unit 2370) in the subject 1997 U.S. Tax Ct. LEXIS 53">*169 category are the floor coverings originally placed in petitioners' hospital facilities during construction. See 105 T.C. 16">supra pp. 20-21.

Petitioners contend that the vinyl floor coverings are not an integral part of their buildings' floors, and, consequently, they are not structural components but are section 1245 class property depreciable over 5-year periods pursuant to S. Rept. 95-1263, supra. Petitioners contend that the floor coverings are attached to the concrete floors using general purpose latex adhesives so that they are not permanently affixed but are easily removed without damage to the underlying floors, that petitioners typically remove the vinyl floor coverings every 3 to 10 years, and that most of the vinyl floor coverings in issue have been removed already. Petitioners further contend that the sheet vinyl floor covering is a type of floor covering peculiar to hospitals or other health care organizations, and that it is section 1245 class property also because of its unusual nature. See Scott Paper Co. v. Commissioner, 74 T.C. 137">74 T.C. 183.

Respondent contends that the vinyl floor coverings are structural components of the buildings to which they relate because the flooring coverings 1997 U.S. Tax Ct. LEXIS 53">*170 are custom cut, not readily removable, not reusable, typical of floorings used in other business and professional facilities, attached to the concrete flooring by adhesives, and designed to remain in place until their useful lives are exhausted.

The term "structural components" includes floors and any permanent coverings for them. Sec. 1.48-1(e)(2), Income Tax 109 T.C. 21">*78 Regs. S. Rept. 95-1263, supra, 1978-3 C.B. (Vol. 1) at 415, however, identifies as personal property

floor coverings which are not an integral part of the floor itself such as floor tile generally installed in a manner to be readily removed (that is it is not cemented, mudded, or otherwise permanently affixed to the building floor but, instead, has adhesives applied which are designed to ease its removal), * * *.

Applying the Whiteco criteria, we conclude that the vinyl floor coverings are not inherently permanent. We are persuaded that the floor coverings were not intended to be, and were not, permanent coverings for the buildings' floors. The floor coverings were attached with adhesives to permit easy removal without damage to the concrete floors. Indeed, much of the floor coverings was removed within 3 to 5 years of their 1997 U.S. Tax Ct. LEXIS 53">*171 installation without damaging the underlying floors or vinyl floor coverings.

Accordingly, we hold that the vinyl floor coverings constitute tangible personal property, and that they are depreciable over a 5-year recovery period.

9-10. Kitchen Water Piping, Kitchen Equipment Steam Lines, and Special X-Ray Plumbing Connections

The kitchen water piping (Property Unit 3080) in the subject category consists of the kitchen grease waste systems (or the grease trap system) and plumbing connections serving specific items of kitchen equipment. See 105 T.C. 16">supra pp. 21-23. The plumbing connections branch off from a hospital's main water lines and supply water directly to specific items of equipment located in petitioners' kitchens, such as the dishwashers, coffee urns, steam kettles, braising pans, and ice makers, they are necessary for the operation of the kitchen equipment and are used solely with the items of equipment to which they relate. The kitchen equipment steam lines (Property Unit 3070), are identical to the kitchen plumbing connections. The special plumbing connections for the x-ray equipment (Property Unit 2244) are required for the operation and use of the x-ray equipment and are used 1997 U.S. Tax Ct. LEXIS 53">*172 only with that equipment. See 105 T.C. 16">supra pp. 22-23.

Petitioners contend that the kitchen water piping, the kitchen equipment steam lines, and the x-ray equipment special plumbing connections constitute personal property, 109 T.C. 21">*79 depreciable over 5-year periods. Petitioners maintain that those disputed property items do not relate to the operation or maintenance of a building because of their relationship with the kitchen or x-ray equipment. They also contend that most commercial buildings do not have kitchen grease waste systems, which are directly related to petitioners' food preparation activities. In support of their contentions, petitioners rely on 74 T.C. 137">Scott Paper Co. v. Commissioner, supra; Morrison, Inc. v. Commissioner, supra; Duaine v. Commissioner, supra;Texas Instruments, Inc. v. Commissioner, supra;58 T.C. 365">Central Citrus Co. v. Commissioner, supra; and Rev. Rul. 66-299, 1966-2 C.B. 14. Petitioners contend that our reasoning in Morrison, Inc. v. Commissioner, supra, wherein we found that the kitchen drainage system and kitchen water piping constituted personal property, is squarely applicable to the instant case.

Respondent contends that the disputed property items are structural components. Respondent 1997 U.S. Tax Ct. LEXIS 53">*173 agrees that the disputed property items are factually similar to property items involved in Morrison, Inc. v. Commissioner, supra. Respondent asserts, however, that in Morrison the taxpayers had argued that the kitchen water piping was eligible for ITC as "other tangible property". Respondent contends that a holding that the disputed property items are "other tangible property" would result in those items constituting section 1250(c) property because petitioners are not involved in an activity enumerated in section 1245(a)(3)(B). Respondent additionally maintains that the disputed property items are not unique to hospitals.

The terms "plumbing and plumbing fixtures" are listed specifically in section 1.48-1(e)(2), Income Tax Regs., as constituting structural components of a building. Nonetheless, in Morrison, Inc. v. Commissioner, supra, we focused on the use of the kitchen drains and concluded that the kitchen drainage system did not relate to the operation or maintenance of a building but rather constituted personal property because it directly serviced the taxpayers' equipment and machinery. Similarly, we concluded that the cafeterias' kitchen water piping was necessary to and 1997 U.S. Tax Ct. LEXIS 53">*174 used directly with specific pieces of equipment and consequently did not relate to general building plumbing. Id.; see also Texas Instruments, Inc. v. Commissioner, supra;Duaine v. Commissioner, supra.The 109 T.C. 21">*80 facts in the instant case relating to the disputed property items in the subject categories are not materially distinguishable from the facts in Morrison, Inc. v. Commissioner, supra, and Duaine v. Commissioner, supra.

The disputed property items in the subject categories relate to the operation of specialized kitchen or hospital equipment. That equipment is related to petitioners' business of providing healthcare services. As such, the disputed property items are assets accessory to petitioners' business and, consequently, they do not constitute structural components of the buildings. E.g., 74 T.C. 137">Scott Paper Co. v. Commissioner, supra; Morrison, Inc. v. Commissioner, supra; Duaine v. Commissioner, supra;Texas Instruments, Inc. v. Commissioner, supra;58 T.C. 365">Central Citrus Co. v. Commissioner, supra.

Accordingly, we hold that the kitchen water piping, kitchen equipment steam lines, and special x-ray plumbing connections are personal property, and that they are depreciable over 5-year recovery 1997 U.S. Tax Ct. LEXIS 53">*175 periods.

11. Kitchen Hoods and Exhaust Systems

Kitchen exhaust hoods, exhaust fans, supply air intake fans and related duct work, and dishwasher condensate return units constitute Property Unit 3085. See 105 T.C. 16">supra pp. 23-25. The exhaust hoods and exhaust systems dissipate air and smoke produced by the ranges and cooking equipment located in the kitchens, ventilate the air in the kitchen areas of petitioners' hospitals in order to ensure the proper operation of petitioners' kitchen equipment, replace the air expelled from the kitchens, and remove steam and humidity expelled by petitioners' kitchen dishwashers in order to keep the dishwashers operating properly. The kitchen hoods and exhaust systems do not serve to ventilate areas of the hospitals other than the kitchen areas. The dishwasher exhaust fans and related duct work operate solely to exhaust steam and other vapors from the dishwashers. The dishwasher condensate return units are dedicated solely to providing emergency hot water for the hospital dishwashers. The piping is attached to the hospital buildings and runs directly from a dishwasher to a boiler and back to the dishwasher.

Petitioners contend that the disputed property items 1997 U.S. Tax Ct. LEXIS 53">*176 in the subject category are not structural components of a building, 109 T.C. 21">*81 but are section 1245 class property, depreciable over 5-year periods. Petitioners maintain that removal of the disputed property items would not affect the hospitals' main water piping or sanitary drainage. Petitioners contend that those items do not relate to general building plumbing and thus do not relate to the operation or maintenance of a building. Petitioners rely on the "sole justification" test of section 1.48-1(e)(2), Income Tax Regs., to support their contention that the kitchen hoods and exhaust systems and the dishwasher condensate return units constitute personal property within the meaning of section 1.48-1(c), Income Tax Regs., and therefore of section 1.1245-3(b), Income Tax Regs.

Respondent contends that the disputed property items are structural components of the buildings to which they relate. Respondent contends that the items are not unique to hospitals, are adaptable to other uses, are securely attached to the building structure, and provide more than incidental benefit and comfort to petitioners' kitchen employees. Specifically, respondent contends that the dishwasher condensate return unit 1997 U.S. Tax Ct. LEXIS 53">*177 is more closely related to the boiler than the dishwasher.

In Morrison, Inc. v. Commissioner, T.C. Memo. 1986-129, we held that the cafeterias' kitchen air ventilation system constituted personal property, based on the "sole justification" test of section 1.48-1(e)(2), Income Tax Regs. Respondent agrees that the kitchen hoods and exhaust systems, but not the dishwasher condensate return unit, are very similar to items involved in Morrison.

For the reasons previously discussed in Morrison, Inc. v. Commissioner, supra, we agree with petitioners that the kitchen hoods and exhaust systems, as well as the dishwasher condensate return units, satisfy the "sole justification" test of section 1.48-1(e)(2), Income Tax Regs. The evidence presented by petitioners establishes that the kitchen hoods and exhaust systems were installed only to meet temperature or humidity requirements essential for the operation of petitioners' kitchen equipment and they provide only incidental benefit to petitioners' employees. The dishwasher condensate return units and related piping were installed solely to provide emergency hot water for petitioners' dishwasher equipment. The disputed property items in the subject 1997 U.S. Tax Ct. LEXIS 53">*178 category consequently do not constitute structural 109 T.C. 21">*82 components of petitioners' buildings. Morrison, Inc. v. Commissioner, supra; Duaine v. Commissioner, supra; sec. 1.48-1(e)(2), Income Tax Regs.

Accordingly, we hold that the disputed property items in the subject category constitute personal property, and that they are depreciable over 5-year recovery periods.

12. Patient Corridor Handrails

Patient corridor handrails (Property Unit 3190) are handrails placed along the patient corridors of petitioners' hospital facilities to assist patients. See 105 T.C. 16">supra pp. 25-26. The handrails can be removed from the walls by removing the bolts holding them in place, and their removal would not damage the hospital walls. In some instances, the handrails have been removed.

Petitioners contend that the patient corridor handrails constitute section 1245 class property, depreciable over 5-year periods. Additionally, petitioners contend that the disputed property items in the subject category are peculiar to hospitals and other medical facilities and that they do not relate to the operation or maintenance of the buildings. Petitioners further contend that the patient corridor handrails are analogous to 1997 U.S. Tax Ct. LEXIS 53">*179 the vault doors, record vault doors, night depository facilities, and walk-up and drive-up teller's windows that, in Rev. Rul. 65-79, 1965-1 C.B. 26, constituted personal property within the meaning of section 1.48-1(c), Income Tax Regs., because the items were accessory to the banking business. Petitioners contend that patient corridor handrails are clearly distinguishable from bumper guards which are used to protect the hospital walls and which have been treated as relating to the operation of petitioners' buildings. Petitioners contend further that the patient corridor handrails are reusable.

Respondent contends that the patient corridor handrails are structural components because they relate to the operation and maintenance of the hospital buildings. Respondent agrees that the handrails are removable but asserts that they generally are not reusable. Respondent does not agree that the patient corridor handrails relate to the provision of healthcare services. Respondent asserts that they protect 109 T.C. 21">*83 walls, similar to bumper guards, and provide support for anyone needing it, similar to handrails in stairwells.

Section 1.48-1(c), Income Tax Regs., provides that all items contained in 1997 U.S. Tax Ct. LEXIS 53">*180 or attached to a building constitute personal property, unless they constitute structural components of a building. Section 1.48-1(e)(2), Income Tax Regs., provides that, for a property item to constitute a structural component of a building, it must relate to "the operation or maintenance of a building." In Scott Paper Co. v. Commissioner, 74 T.C. 137">74 T.C. 183, we stated that "Items which occur in an unusual circumstance and do not relate to the operation or maintenance of a building" are not structural components of a building. Moreover, assets that are accessory to a business constitute tangible personal property. Metro Natl. Corp. v. Commissioner, T.C. Memo. 1987-38; S. Rept. 1881, supra, 1962-3 C.B. at 722.

We are persuaded that the patient handrails are placed in patient corridors to aid hospital patients who might need support and that they are not intended to function as wall protectors. We conclude that the handrails are assets accessory to petitioners' business of providing healthcare services within the meaning of S. Rept. 1881, supra, 1962-3 C.B. at 722. Consequently, we hold that the handrails do not constitute structural components and that the patient corridor handrails therefore 1997 U.S. Tax Ct. LEXIS 53">*181 constitute personal property that must be depreciated over 5-year recovery periods.

13. Overbed Lights and Related Electrical Connections

The overbed lights (Property Unit 4050) in the subject category are fluorescent light fixtures placed directly over the patient beds. See 105 T.C. 16">supra pp. 26-27. The lights are activated from the bedside by a doctor, nurse, or other hospital employee in connection with examining, bathing, or preparing a patient for surgery. General reading lights, vanity lights, night lights, and large double-pane windows provide other illumination for the patient rooms.

Petitioners contend that the overbed lights are not structural components of their buildings, but that they are section 1245 class property, depreciable over 5-year recovery periods. Petitioners assert that the overbed lights are not intended or designed to be used for basic patient room illumination, they 109 T.C. 21">*84 are used solely by doctors, nurses, and staff in examining patients and providing health care services, and that they are accessory to petitioners' businesses. Petitioners further contend that the overbed lights fit the description of special lighting delineated in S. Rept. 95-1263, supra, 1978-3 C.B. 1997 U.S. Tax Ct. LEXIS 53">*182 (Vol. 1) at 415, and, therefore, the overbed lights constitute section 1245 class property.

Respondent contends that the overbed lights are structural components of the buildings to which they relate. Respondent also contends that the overbed lights are permanently installed in the ceiling of the buildings, provide general room illumination, and are identical to other fluorescent lights in the hospital buildings. Additionally, respondent disputes petitioners' assertion that the overbed lights are used exclusively by healthcare professionals.

Section 1.48-1(e)(2), Income Tax Regs., includes "electric wiring and lighting fixtures" as an example of a structural component. Nonetheless, in S. Rept. 95-1263 (see supra note 48) Congress recognized that "special lighting" which has no more than an incidental relationship to the operation or maintenance of a building constitutes personal property. E.g., Metro Natl. Corp. v. Commissioner, supra (decorative lighting and plant grow lights). Lighting which serves as an accessory to a business also constitutes personal property. Id. (security lighting illuminating the outside perimeter of a building housing a psychiatric facility). In Morrison v. Commissioner, T.C. Memo. 1986-129, 1997 U.S. Tax Ct. LEXIS 53">*183 we held that the taxpayers' emergency lighting constituted personal property and noted that lighting fixtures and electrical connections that "do not provide basic illumination" and that are "accessory to a business" do not constitute structural components of a building. Id.

Respondent contends that the overbed lights are not similar to the emergency lights involved in Morrison, Inc. v. Commissioner, but are ordinary fluorescent fixtures which provide general room illumination. We agree.

We are not persuaded that the overbed lights are "special lighting" within the meaning of S. Rept. 95-1263, supra, 1978-3 C.B. (Vol. 1) at 415, or that they constitute an asset accessory to a business within the meaning of S. Rept. 1881, supra, 1962-3 C.B. at 722. The overbed lights are standard 4-tube florescent light fixtures placed in the 109 T.C. 21">*85 acoustical ceilings of the hospital buildings. Photographs contained in the record reveal that the overbed lights provide basic room illumination and have more than an incidental relationship to the operation or maintenance of petitioners' buildings. There is no indication in the record that petitioners intended the overbed lights to be temporary. In our view, 1997 U.S. Tax Ct. LEXIS 53">*184 removal of the light fixtures would affect the integrity of the building.

Accordingly, we hold that the overbed lights are structural components of the buildings which constitute section 1250 class property, and that, consequently, they are depreciable over the same recovery periods as the buildings to which they relate.

14. Partitions

The partitions (Property Unit Number 3240) in the subject category are accordion-style room dividers placed in conference rooms or cafeterias on tracks attached to the ceilings of petitioners' hospitals. See 105 T.C. 16">supra pp. 27-28. They are used to divide areas of large rooms into smaller areas where conferences and luncheons are held. The partitions are manufactured on assembly lines and are available as catalog items from manufacturers. None of the partitions bears any structural load. The partitions are removable and at least one of them has been removed from one of petitioners' hospital facilities and is currently in storage. Removal of the partitions does not affect the essential structure of the hospital buildings.

Petitioners contend that the partitions do not constitute structural components of the buildings to which they relate because they are not 1997 U.S. Tax Ct. LEXIS 53">*185 permanent and are not an integral part of the building structure but constitute personal property, depreciable over 5-year periods. Petitioners contend that the partitions are similar to the decorative lattice millwork in Morrison, Inc. v. Commissioner, supra, and the movable partitions in Minot Fed. Sav. & Loan Association v. United States, 435 F.2d 1368">435 F.2d 1368 (8th Cir. 1970), and King Radio Corp. v. United States, 486 F.2d 1091">486 F.2d 1091 (10th Cir. 1973), which were held to constitute section 1245 class property.

Respondent contends that the partitions are structural components. Respondent maintains that, because the disputed 109 T.C. 21">*86 property items are not easily reusable because of the substantial support system they require, the partitions are factually distinguishable from the partitions involved in Morrison, Inc. v. Commissioner, supra, 313 F. Supp. 294">Minot Fed. Sav. & Loan Association v. United States, supra, and 486 F.2d 1091">King Radio Corp., Inc. v. United States, supra. We do not agree.

The words "partitions" and "doors" are listed in section 1.48-1(e)(2), Income Tax Regs., as items that generally constitute structural components of a building. Nonetheless, in Morrison, Inc. v. Commissioner, supra, we stated that doors 1997 U.S. Tax Ct. LEXIS 53">*186 constitute a structural component of a building "only if they are a permanent part of the * * * building, so that their removal would affect the essential structure of the building." Relying on S. Rept. 95-1263, supra, 1978-3 C.B. (Vol. 1) at 415, we found that decorative lattice millwork in the taxpayers' restaurants, which served to separate the customer serving line from the dining portions of the cafeteria and which was not used to provide structural support for the cafeteria's ceiling, was personal property because "The lattice millwork could easily be removed without permanently damaging the underlying ceiling or walls". Morrison, Inc. v. Commissioner, supra.

We are persuaded that the partitions in the subject category are not inherently permanent. The partitions are designed to subdivide cafeterias and conference rooms into smaller eating or meeting space. They provide no structural support for the ceilings or walls. The partitions are capable of being moved, and have been removed, without damage to the building or to the partitions. Their removal would not affect the operation or maintenance of the buildings. The partitions have no more than an "incidental relationship" to 1997 U.S. Tax Ct. LEXIS 53">*187 the overall operation or maintenance of the buildings. Morrison, Inc. v. Commissioner, supra; S. Rept. 95-1263 supra, 1978-3 C.B. (Vol. 1) at 415. But cf. Texas Instruments, Inc. v. Commissioner, T.C. Memo. 1992-306 (window walls were structural components); L.L. Bean, Inc. v. Commissioner, T.C. Memo. 1997-175 (storage rack systems were structural components).

Accordingly, we hold that the partitions are personal property, and that they have a 5-year recovery period.

109 T.C. 21">*87 15. Patient Bathroom Accessories and Plastic Mirrors

Bathroom accessories (Property Unit 2360) and plastic mirrors (Property Unit 2385) in the subject category include soap dispensers, mirrors, towel racks, grab bars, toilet paper holders, bathrobe hooks, shower curtain rods, and toiletry shelves, contained in the patient room bathrooms ⁵⁰ of petitioners' hospital facilities. See 105 T.C. 16">supra pp. 28-29. The accessories are movable and removable.

Petitioners contend that accessories located in patient room bathrooms are an integral part of petitioners' provision 1997 U.S. Tax Ct. LEXIS 53">*188 of healthcare services to their patients and are not related to the overall operation or maintenance of a building but constitute section 1245 class property, depreciable over 5-year periods. Petitioners assert that the bathrooms are designed specifically to be used only by petitioners' patients, and that they are in addition to the public bathrooms and the employee bathrooms that are contained in most types of buildings and which are necessary for the operation of the buildings.

Petitioners maintain that the bathrooms and related bathroom accessories are an accessory to the hospital business because hospitals and other health care organizations must provide each patient with access to a bathroom without having to enter the general patient corridor area. Petitioners rely on Scott Paper Co. v. Commissioner, 74 T.C. 137">74 T.C. 183, in support of their contention that the disputed property items do not relate to the operation or maintenance of a building and should not be considered structural components because the bathroom accessories are items which occur in an unusual circumstance.

Respondent contends that the bathroom accessories constitute structural components of the buildings to which 1997 U.S. Tax Ct. LEXIS 53">*189 they relate. Respondent asserts that the bathroom accessories are permanent, designed to remain in place for their useful lives, and are not economically reusable if they are removed. Respondent contends that the number of bathrooms or type of people who utilize the bathroom accessory does not change the nature of the disputed property items. Respondent denies that the patient bathroom accessories occur in unusual circumstances, 109 T.C. 21">*88 pointing to hotels, motels, and apartment buildings that also contain a large number of bathrooms in comparison to the number of bathrooms contained in typical office buildings.

Although we agree with petitioners that most office buildings do not contain one bathroom for each one-to-two persons who will be served by the business conducted within the building, we do not agree that the large number of patient bathrooms serve a function unique to petitioners' business or that they are assets accessory to the business of providing healthcare services. See Morrison, Inc. v. Commissioner, supra, where we found that restroom accessories such as vanity cabinets and counters, even though required by local occupancy codes to be greater in number than other business 1997 U.S. Tax Ct. LEXIS 53">*190 buildings, were not accessory to the taxpayers' restaurant business but constituted structural components of a building.

We conclude that the bathroom accessories constitute structural components of the buildings. Although capable of being removed and reused, there is no evidence that at the time they were installed petitioners ever intended to remove and reuse the bathroom accessories. We are persuaded that the bathroom accessories are and were intended to be a permanent part of the buildings. The bathroom accessories also serve a function that is more than incidental to the operation of the building.

Accordingly, we hold that the bathroom accessories are structural components of the buildings to which they relate and therefore constitute section 1250 class property, and that they are depreciable over the same recovery period as the buildings.

16. Acoustical Ceilings

Acoustical ceiling tiles and related grid work in petitioners' hospitals comprise Property Unit 2260. See 105 T.C. 16">supra pp. 29-30. The acoustical ceilings are movable and removable, and their removal does not damage the building structure.

Petitioners contend that the acoustical ceilings are not structural components of petitioners' 1997 U.S. Tax Ct. LEXIS 53">*191 hospital buildings, but constitute section 1245 class property, depreciable over 5-year periods. Petitioners assert that the acoustical ceilings 109 T.C. 21">*89 serve needs peculiar to the operation of their hospital businesses because they prevent dust and dirt particles that accumulate on the duct work and pipes located between the acoustical ceilings and the structural ceilings of petitioners' hospitals from falling into the areas below, and that they also absorb sound.

Respondent contends that the acoustical ceilings are structural components. Respondent maintains that the acoustical ceilings are virtually identical to the acoustical ceilings involved in Metro Natl. Corp. v. Commissioner, T.C. Memo. 1987-38, and Texas Instruments, Inc. v. Commissioner, supra, which we found constituted structural components.

Section 1.48-1(e)(2), Income Tax Regs., includes ceilings as examples of structural components. We recognized in Morrison, Inc. v. Commissioner, supra, however, that the reference to ceilings in the regulation means inherently permanent ceilings.

Petitioners contend that, because the acoustical ceilings in those cases did not serve the taxpayer's particular business needs, the facts in 1997 U.S. Tax Ct. LEXIS 53">*192 the instant case are distinguishable from those involved in Metro Natl. Corp. v. Commissioner, supra, and Texas Instruments, Inc. v. Commissioner, T.C. Memo. 1992-306. Petitioners maintain that the acoustical ceilings involved in the subject category are analogous to the vault doors, walk-up and drive-up teller's windows, and teller's booth installed by a bank which respondent held constituted tangible personal property within the meaning of section 1.48-1(c), Income Tax Regs., because their removal would not affect the continued operation of the bank building as a building, even though their removal would necessitate making repairs to the building and could affect the continued operation of the bank's business. Rev. Rul. 65-79, 1965-1 C.B. 26.

We conclude that the acoustical ceilings are not materially distinguishable from the false ceilings described in Metro Natl. Corp. v. Commissioner, supra, or the suspended ceilings depicted in Texas Instruments, Inc. v. Commissioner, supra. Movability is only one characteristic to be considered in determining whether property is a structural component. Everhart v. Commissioner, 61 T.C. 328">61 T.C. 328, 61 T.C. 328">331 (1973). We are persuaded that the acoustical ceilings 1997 U.S. Tax Ct. LEXIS 53">*193 were designed and intended to be a permanent part of the buildings and that their removal would affect the operation of the buildings in 109 T.C. 21">*90 which they were installed. We do not think that the incidental benefit of trapping some dust and dirt and providing sound reduction is sufficient to convert the ceilings into assets accessory to petitioners' healthcare business as petitioners contend they are. The acoustical ceilings serve a function that is more than incidental to the operation and maintenance of the buildings.

Accordingly, we hold that the acoustical ceilings are structural components of petitioners' buildings and therefore constitute section 1250 class property and that they are depreciable over the same recovery periods as the buildings to which they relate.

17. Steam Boilers and Related Accessories

The steam boilers and the related accessories (Property Unit 3193) in the subject category provide heat for petitioners' buildings and provide high-pressure steam essential to the operation of particular items of equipment located in petitioners' hospital facilities, such as humidifiers, air make-up units, and central sterilization equipment. See 105 T.C. 16">supra p. 31.

Petitioners contend 1997 U.S. Tax Ct. LEXIS 53">*194 that the boilers are personal property, depreciable over 5-year periods. Petitioners assert that production of high-pressure steam necessary for the operation of the hospitals' sterilizers and humidifiers is the primary reason for the boiler's existence, and that heating the building is an incidental function. Accordingly, petitioners contend, the boilers satisfy the "sole justification" test of section 1.48-1(e), Income Tax Regs.

Respondent contends that the boilers and accessories are components of a heating system and thus constitute structural components because they relate to the operation or maintenance of the hospital buildings. Respondent maintains that the boilers are designed to generate hot water and pressurized steam primarily for heating purposes and secondarily for use in various hospital equipment. Respondent also asserts that the boilers are not removable or reusable.

Section 1.48-1(e)(2), Income Tax Regs., includes as an example of a structural component "all components (whether in, on, or adjacent to the building) of a * * * heating system, including motors, compressors, pipes and ducts." Specifically 109 T.C. 21">*91 excluded, however, is "machinery the sole justification for the 1997 U.S. Tax Ct. LEXIS 53">*195 installation of which is the fact that such machinery is required to meet temperature or humidity requirements which are essential for the operation of other machinery * * *". Id.

Petitioners contend that the steam boilers are, in all material respects, the same as the boiler facility analyzed in Rev. Rul. 70-160, 1970-1 C.B. 7. In that ruling, a furniture manufacturer constructed a separate boiler facility to produce steam for use directly in the furniture manufacturing process, for heating make-up air needed to maintain proper humidity and temperature conditions in the machine, veneer, and cabinet room areas of the factory, and for incidental heating of other areas of the main factory and adjacent buildings. Id. Respondent ruled that the boiler facility (excluding the building) constituted personal property because it satisfied the "sole justification" test inasmuch as the boiler facility was "designed, constructed, and operated for the essential purpose and primary function of steam production, in order to furnish additional air, and to provide the required temperature and humidity requirements essential in the manufacture of the furniture." Id. at 8. Respondent contends that Rev. Rul. 70-1601997 U.S. Tax Ct. LEXIS 53">*196 is inapposite because heating the buildings was the primary purpose for the boilers.

We are not persuaded that the boilers in the subject category were designed, constructed, and operated solely to provide steam for the operation of petitioners' hospital equipment and that heating the buildings is merely an incidental function of the boilers. We also do not agree with respondent that producing high-pressure steam for petitioners' equipment is an incidental function of the boilers. Based on the record, we conclude that the boilers were installed to, and did, serve dual functions. There is no evidence that petitioners had any other heating system for their building outside of the subject boilers. Heat is essential for the operation of buildings. However, we also are convinced that high-pressure steam is essential for the operation of certain hospital equipment. Under the circumstances present in the instant case, we find that both providing heat for the buildings and providing high-pressure steam for the hospital equipment are essential functions of the boilers, and that neither function 109 T.C. 21">*92 is incidental to the other. Accordingly, the "sole justification" test is not satisfied. See sec. 1.48-1(e)(2), Income Tax Regs.1997 U.S. Tax Ct. LEXIS 53">*197

Based on the foregoing, we conclude that the boilers are analogous to the electrical distribution system involved in Scott Paper Co. v. Commissioner, 74 T.C. 137">74 T.C. 137 (1980). The record, however, does not demonstrate the percentage of the steam produced by the boilers that is used to operate hospital equipment. Consequently, we have no "logical and objective measure" of the portion of the boilers that would constitute section 1245 personal property. See 74 T.C. 137">Scott Paper Co. v. Commissioner, supra at 165. Accordingly, we sustain respondent's determination that the boilers must be depreciated over the same period as the buildings to which they relate.

To reflect the foregoing,

Appropriate orders will be issued.