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this connection, we find it significant that petitioner could not
have removed and relocated 1,000 feet of 1968 pipe without
disrupting its entire pipeline system.
Respondent describes the use of new pipe (the 1991 pipe) as
"a controlling fact". We think that, under the circumstances
herein, respondent's reliance on this element is misplaced. The
courts have consistently recognized that the mere use of new
materials does not prevent an expenditure from being classified
as "repairs". See United States v. Wehrli, 400 F.2d at 689;
Niagara Mohawk Power Corp. v. United States, 214 Ct. Cl. 686, 558
F.2d 1379, 1388 (1977); Red Star Yeast & Prods. Co. v.
Commissioner, 25 T.C. 321, 349 (1955); Buckland v. United States,
66 F. Supp. 681, 683 (D. Conn. 1946). The key consideration is
the overall purpose of the relocation and the context in which it
occurred.
On the facts of this case, we hold that petitioner is
entitled to a current deduction for the costs of the relocation.
To implement our holding and concessions,
Decision will be entered
under Rule 155.
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