George and Sachiko Tamura v. United States of America, Ben Tamura v. United States of America, Ken Tamura v. United States

The government appeals from the district court’s order granting appellee taxpayers’ summary judgment motion on the ground that appellees’ expenditures on an onion storage shed qualified for an investment tax credit under Internal Revenue Code section 48. We reverse.

Taxpayers are onion farmers who built a 100 x 100 foot concrete-floored steel storage shed in 1973 and 1974. Onions are stored there during the six month period between harvest and sale. The shed has both standard and garage-sized doors, urethane-coated walls and ceilings, and a ventilation system. Forty percent of the shed’s cost is attributable to the floor, insulation, and ventilation system. When not used for storing onions, the shed houses empty onion crates and various farm equipment.

Appellees claimed an investment tax credit with respect to the shed on their 1973 and 1974 income tax returns. The Commissioner of Internal Revenue determined that the shed was a “building” under I.R.C. § 48 and thus did not qualify as property eligible for an investment credit. Appellees paid the assessed deficiency and sued for a refund. The district court consolidated the suits, and in granting appellees’ motion for summary…