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Harwichport property. We have no way of sorting out petitioner's
1989 expenditures. We sustain respondent's determination.
Respondent argues that all of the 1990 expenditures must be
capitalized as preopening expenses. Startup expenses must be
capitalized pursuant to the preopening expense doctrine, and that
doctrine is applicable to section 212 activities as well as
section 162 activities. Hardy v. Commissioner, 93 T.C. 684, 688
(1989); Sorrell v. Commissioner, 882 F.2d 484 (11th Cir. 1989),
revg. T.C. Memo. 1987-351. Petitioner produced no advertisements
showing the Harwichport property for rent or sale. Respondent
produced newspaper advertisements published on or after October
28, 1990, showing the Harwichport property for sale. We have
found that the property was not available for sale prior to
October 28, 1990. We conclude that the expenses incurred prior
to October 28, 1990, are preopening expenses and must be
capitalized. Accordingly, they are not deductible currently
under section 212 but must be added to the basis of the property.
We next address the post-October 28, 1990, expenditures in
dispute. Capital expenditures add to the value or substantially
prolong the useful life of the property. Sec. 1.263(a)-1(b),
Income Tax Regs. Expenses for incidental repairs or maintenance
are deductible currently if they neither materially add to the
value of the property nor appreciably prolong the property's
useful life. Sec. 1.162-4, Income Tax Regs. The remaining
expenditures include: Plumbing expenses in the amounts of $12.56
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