Badger Pipe Line Company - Page 9

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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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