Norwest Corporation and Subsidiaries - Page 1

                                   108 T.C. No. 15                                    

                               UNITED STATES TAX COURT                                

                 NORWEST CORPORATION AND SUBSIDIARIES, Petitioner v.                  
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket Nos. 20567-93, 26213-93.          Filed April 28, 1997.         

                    Norwest Bank Nebraska, N.A., a subsidiary of                      
               petitioner, removed asbestos-containing materials from                 
               its Douglas Street building in connection with the                     
               building's renovation and remodeling.  On its 1989                     
               return, petitioner claimed a $902,206 ordinary and                     
               necessary business deduction with respect to the                       
               asbestos-removal expenditures.    In  the  notice  of                  
               deficiency, respondent disallowed the deduction.                       
                    Held:  The costs of removing the asbestos-containing              
               materials must be capitalized because they were part of                
               a general plan of rehabilitation and renovation that                   
               improved the Douglas Street building.                                  
                    Petitioner's subsidiary Norwest Bank Minneapolis                  
               (NBM) owned "blocked deposits" at the Central Bank of                  
               Brazil (Central Bank) consisting of principal repayments               
               of dollar-denominated loans previously made to Brazil in               
               the ordinary course of NBM's banking business. The                     

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