Helen Sophie Schroeder - Page 13

                                           - 13 -                                            
          the expenditures were capital improvements, but, as part of a                      
          general plan of rehabilitation, she argues that all of the                         
          expenditures nevertheless must be capitalized.                                     
                In United States v. Wehrli, 400 F.2d 686, 689-690 (10th Cir.                 
          1968), the Court of Appeals for the Tenth Circuit stated:                          
                the courts have superimposed upon the criteria in the                        
                [Commissioner's] repair regulation an overriding precept                     
                that an expenditure made for an item which is part of a                      
                "general plan" of rehabilitation, modernization, and                         
                improvement of the property, must be capitalized, even                       
                though, standing alone, the item may appropriately be                        
                classified as one of repair.  * * *  Whether the plan                        
                exists, and whether a particular item is part of it, are                     
                usually questions of fact to be determined by the fact                       
                finder based upon a realistic appraisal of all the                           
                surrounding facts and circumstances, including, but not                      
                limited to, the purpose, nature, extent, and value of the                    
                work done, e.g., whether the work was done to suit the needs                 
                of an incoming tenant, or to adapt the property to a                         
                different use, or, in any event, whether what was done                       
                resulted in an appreciable enhancement of the property's                     
                value.  [Fn. ref. omitted.]                                                  
          Petitioner continued to use the two barns and the granary for the                  
          same business purposes after the repairs as she did before the                     
          repairs.  The capital expenditures to install support rods and a                   
          water heater, to divide a stall into two foaling stalls, and to                    
          demolish a sheep shed and a cow stable were not substantial.  The                  
          only substantial capital expenditures were $6,300 for demolition                   
          of a house and a storage building and removal of debris on the                     
          Rhodes property.  These costs were not deducted by petitioner and                  
          do not relate to any building that was repaired.  "To our                          
          knowledge, every case in which the rehabilitation doctrine has                     
          been applied to date has involved substantial capital                              




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011