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Within the scope of section 263(a)(1) are those amounts paid
or incurred (1) to add to the value, or substantially prolong the
useful life, of property owned by the taxpayer, or (2) to adapt
property to a new or different use. Id. Examples of capital
expenditures include "The cost of acquisition, construction, or
erection of buildings, machinery and equipment, furniture and
fixtures, and similar property having a useful life substantially
beyond the taxable year." Sec. 1.263(a)-2(a), Income Tax Regs.
However, section 1.263(a)-1(b), Income Tax Regs., specifically
recognizes that "Amounts paid or incurred for incidental repairs
and maintenance of property are not capital expenditures * * *.
See section 162 and � 1.162-4."
Expenses incurred as part of a plan of rehabilitation or
improvement must be capitalized even though the same expenses if
incurred separately would be deductible as ordinary and
necessary. United States v. Wehrli, 400 F.2d 686, 689 (10th Cir.
1968); Norwest Corp. v. Commissioner, 108 T.C. 265, 280 (1997).
Similarly, moving expenses can be a current business expense
or a capital expenditure depending on the context. True v.
United States, 894 F.2d 1197, 1209 (10th Cir. 1990). Moving
costs associated with the acquisition of capital assets are
considered part of the cost of acquisition, a capital
expenditure. See Maier Brewing Co. v. Commissioner, T.C. Memo.
1987-385, affd. without published opinion 916 F.2d 716 (9th Cir.
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Last modified: May 25, 2011