Opinion ID: 677026
Heading Depth: 3
Heading Rank: 1

Heading: Whether the carwash structures are inherently permanent structures.

Text: 26 We first address the question of whether the carwash structures are inherently permanent structures. We believe that the tax court here correctly applied the test for inherent permanency enunciated in Whiteco Industries, Inc. v. Commissioner, 65 T.C. 664, 672-73, 1975 WL 3184 (1975). This test, adopted by the Seventh Circuit in McManus v. United States, 863 F.2d 491, 498 (7th Cir.1988), and the Eleventh Circuit in Munford, Inc. v. Commissioner, 849 F.2d 1398, 1405 n. 5 (11th Cir.1988), calls for examination of the property in question in light of the following six factors: 27 (1) Is the property capable of being moved and has it in fact been moved? 28 (2) Is the property designed or constructed to remain permanently in place? 29 (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? 30 (4) How substantial a job is removal of the property and how time-consuming is it? 31 (5) How much damage will the property sustain upon its removal? 32 (6) What is the manner of affixation of the property to the land? 33 Munford, Inc., 849 F.2d at 1405 n. 5 (citing Whiteco Indus., Inc., 65 T.C. at 672-73). Applying this analysis to the case at bar, we have little trouble concluding, as did the tax court, that taxpayers have failed to meet their burden of proof that the facilities are not inherently permanent structures. The structures include concrete foundations and brick walls. They are therefore designed and constructed with an eye toward permanence. Further, taxpayers do not contend that the facilities are readily movable, nor do they suggest that removal of the facilities could be accomplished without sustaining substantial damage. 34 Taxpayers urge that, in determining whether a structure is inherently permanent, we should consider the 'economic permanence' of the structure, i.e., the adaptability of the structure to other uses. Taxpayers suggest that their carwash facilities are 'single-purpose' structures which must be destroyed if the land underlying them is to be used for virtually any other purpose. Noting that the test we adopted in A.C. Monk & Co., supra, 686 F.2d at 1060-61, for determining whether a structure is a building for section 38 purposes includes as a factor the economic permanence of the structure in question, 6 taxpayers argue that, because the regulation speaks of buildings and other inherently permanent structures, Treas. Reg. Sec. 1.48-1(c) (emphasis added), a similar inquiry is appropriate in determining whether a structure is inherently permanent. 35 We are not persuaded. First, we read the language, buildings and other inherently permanent structures, to mean only that the class of inherently permanent structures encompasses the class of buildings, i.e., if a structure is a building, it is also an inherently permanent structure. The converse, however, is not true in all cases. Thus, the language of the regulation does not convince us that a factor relevant in determining whether a structure is a building will also be relevant in determining whether a structure is inherently permanent. Moreover, we think that including 'economic permanence' as a factor in determining whether a structure is inherently permanent would be a meritless exercise for, upon reflection, it is readily seen that virtually no structure which is not a building will be readily convertible into some other form in which it will be amenable to other uses. 36 We affirm the tax court's conclusion that the structures are inherently permanent. Consequently, we need not reach the question, also not decided by the tax court, of whether taxpayers' facilities are buildings. 37