Rev. Rul. 54-58

Advice is requested whether a grain elevator licensed under the laws of the State of Washington and constructed and used according to the terms of a 5-year `occupancy contract' with the Commodity Credit Corporation is a public grain warehouse within the meaning of section 124B of the Internal Revenue Code.

In the instant case the taxpayer operates grain storage facilities in the State of Washington that are licensed under the provisions of chapter 22.08 of the Revised Code of Washington. It used those facilities both for public storage of grain and for storage of grain for its own account. As the result of a 5-year `occupancy contract' offered by the Commodity Credit Corporation, the taxpayer now plans to construct additional storage elevators. These will also be licensed under chapter 22.08 of the Revised Code of Washington. As permitted by the `occupancy contract,' the taxpayer will use some of the space in the additional storage elevators for storage of grain acquired for its own use. However, under the `occupancy contract' the taxpayer will agree that it `shall at all times while the provisions of this contract are operative keep the facility permanently equipped, in good condition, and staffed and open for business during regular business hours as a public, commercial, grain elevator for the receipt, storage, shipment, purchase, sale and handling of grain. * * *'

Under the `occupancy contract,' the Commodity Credit Corporation guarantees 75 percent occupancy of the additional facilities during the first three contract years and 40 percent thereof for the two remaining contract years. The guaranteed occupancy space would be subject to the control of that agency.

Section 124B of the Internal Revenue Code relating to the deduction for amortization of grain storage facilities provides, in part, as follows:

(d) DEFINITION OF GRAIN STORAGE FACILITY.-For the purposes of this section, the term `grain storage facility' means-

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(2) any public grain warehouse permanently equipped for receiving, elevating, conditioning, and loading out grain, The construction, reconstruction, or erection of which was completed after December 31, 1952, and on or before December 31, 1956. * * *

Chapter 22.08 of the Revised Code of Washington provides, in part, as follows:

22.08.010 Definition, as used in this chapter:

`Grain warehouse' includes any elevator, mill, warehouse, public grain warehouse, public warehouse, or other structure in which grain or other commodities are received from the public for storage, shipment or handling; * * *

`Warehouseman' means any person owning, operating, or controlling a grain warehouse; * * *.

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22.08.160 Warehouseman's license. Every person operating any grain or terminal warehouse subject to the provisions of this chapter shall, on or before the first day of July of each year, procure from the director a license for each warehouse so owned or operated for the ensuing year before transacting business therein. * * *.

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22.08.270 Duty of warehouseman to serve.

Every grain warehouseman shall receive for storage, handling, or shipment, insofar as the capacity of his warehouse will permit, all commodities included in the provisions of this chapter, in suitable condition for storage, tendered him in the usual course of business, and shall issue therefor a warehouse receipt or receipts * * *.

It is held that a grain elevator constructed after December 31, 1952, and on or before December 31, 1956, that is licensed under the laws of the State of Washington or under the laws of any other State having equivalent licensing provisions, and that is used for the storage of grain consistent with the terms of an `occupancy contract' with the Commodity Credit Corporation, is a public grain warehouse within the meaning of section 124B of the Internal Revenue Code.