Rev. Proc. 68-35

SECTION 1. PURPOSE.

This purposes of this Revenue Procedure is to provide advice concerning the proper classification, within the guideline classes of Revenue Procedure 62-21, C.B. 1962-2, 418, of certain buildings (referred to as sawmill buildings, planing buildings, and dry-kiln buildings, owned and used by taxpayers in the sawmill business.

SEC. 2. FACTS.

.01 The sawmill buildings are steel frame structures with corrugated siding. They have concrete foundations with roof trusses to carry roof loads. Housed within such a building are various pieces of machinery and equipment including a bandmill, log carriage, edger, trimmer, resaw, green chain, and conveyors. Electricity, water, and steam are available within the structure.

.02 The planing mill buildings are similar to sawmill buildings.

.03 The dry-kiln buildings are block structures housing steam lines and fans. The boiler room and control areas of such a building are exterior to, but attached to, the dry-kiln building structure.

.04 Major items of equipment that these buildings house, support, or serve may be replaced without demolishing or replacing the buildings.

SEC. 3. BACKGROUND.

.01 Buildings included in Part I, Group One, Class 4 of Revenue Procedure 62-21, are general purpose buildings such as office buildings, industrial warehouse, storage, and factory buildings. Special-purpose structures for logging and sawmilling are classified in Part I, Group Two, Class 4 of Revenue Procedure 62-21.

.02 Special-purpose structures, as defined in Question and Answer 56 of Revenue Procedure 62-21, C.B. 1962-2 at page 479, are those which are an integral part of the production process, and which are so closely associated with the equipment they house, support, or serve that they would normally be replaced (entirely or in large part) contemporaneously with that equipment.

SEC. 4. CONCLUSION.

.01 The special design of a building to meet the specifications and needs of particular processing operations is not a controlling factor in determining whether it is a general-purpose building or a special-purpose structure within the meaning of Revenue Procedure 62-21.

.02 Limited functional use of buildings due to existing design and the prospect of difficulty in adapting to other uses are definitive of single or limited purpose buildings, but they are not definitive of special-purpose structures.

.03 A showing that physical changes to a building must be made or that an interim shutdown of processing operations may be necessary in order to replace machinery and equipment is not to be equated with a need to replace the building contemporaneously with the equipment.

.04 Structures such as sawmill buildings, planing mill buildings, and dry-kiln buildings considered herein are general-purpose buildings included in the guideline class for Part I, Group One, Class 4 of Revenue Procedure 62-21; they are not special-purpose structures and are not included in the guideline class for Part I, Group Two, Class 4 of Revenue Procedure 62-21.

SEC. 5. EFFECT ON OTHER DOCUMENTS.

Revenue Procedure 62-21 is supplemented.