Rev. Proc. 66-39

SECTION 1. PURPOSE.

The purpose of this procedure is to provide advice concerning the proper classification of electric utility buildings and structures within the guideline classes of Revenue Procedure 62-21, C.B. 1962-2, 418.

SEC. 2. BACKGROUND.

.01 Electric utility companies are normally engaged in the production, transmission and distribution of electricity for sale in a specified area. Broad separate plant accounts are maintained for Production, Transmission, Distribution, and General Plant. Production Plant is further subdivided into source of power generation, i.e., Steam, Nuclear, Hydraulic, Other. subaccount for structures (buildings) Each of the plant accounts has a subaccount for structures (buildings) and improvements related directly to that activity.

.02 Buildings included in part I, group 1, 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 electric utility property are classified in part I, group 4, class 3 of Revenue Procedure 62-21, with the equipment to which they directly relate.

.03 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.

.04 Depreciable land improvements are classified in group 1 or group 4, respectively, with the buildings and structures to which they specifically relate.

SEC. 3. CONCLUSION.

.01 General office buildings and other structures includible under the account, General Plant, are included in part I, group 1, class 4-buildings. Depreciable land improvements associated with such General Plant buildings or structures are included within the same guideline class.

.02 Classification with respect to buildings and structures includible within the accounts for Production, Transmission, Distribution, or Other Plant, depends upon the test of definition set forth in Question and Answer 56 of Revenue Procedure 62-21.

.03 In general, the main production generating plant which is not replaced contemporaneously with the equipment it houses, supports, or serves, is included within part I, group 1, class 4-buildings (factories) for purposes of the depreciation guidelines. Structures housing boilers of modern generating plants which are integrated with the boilers and serve as a support therefor, are included in the appropriate equipment class of group 4.

.04 Structures which house equipment such as batteries, meters, regulators, hydrogen tanks, and chlorinators are as a rule small enclosures or sheds which are replaced contemporaneously with the equipment they serve, support, or enclose and, as such, they are special purpose structures included with the appropriate class in part I, group 4.

.05 Depreciable land improvements are included within the same class as the structures to which they relate.

SEC. 4. EFFECT ON OTHER DOCUMENTS

Revenue Procedure 62-21, C.B. 1962-2, 418, is supplemented.