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