-22-
condition, then they are repairs and are
deductible."
Moss v. Commissioner, 831 F.2d 833, 835 (9th Cir. 1987), revg. T.C.
Memo. 1986-128 (quoting Estate of Walling v. Commissioner, 373 F.2d
190, 192-193 (3d Cir. 1967), revg. and remanding 45 T.C. 111
(1965)).
The Court in Plainfield-Union Water Co. v. Commissioner, 39
T.C. 333, 338 (1962), articulated a test for determining whether an
expenditure is capital by comparing the value, use, life expectancy,
strength, or capacity of the property after the expenditure with the
status of the property before the condition necessitating the
expenditure arose (the Plainfield-Union test). Moreover, the
Internal Revenue Code's capitalization provision envisions an
inquiry into the duration and extent of the benefits realized by the
taxpayer. See INDOPCO, Inc. v. Commissioner, supra at 88.
Whether an expense is deductible or must be capitalized is a
factual determination. Plainfield-Union Water Co. v. Commissioner,
supra at 337-338. Courts have adopted a practical case-by-case
approach in applying the principles of capitalization and
deductibility. Wolfsen Land & Cattle Co. v. Commissioner, 72 T.C.
1, 14 (1979). The decisive distinctions between current expenses and
capital expenditures "are those of degree and not of kind." Welch
v. Helvering, supra at 114.
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