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plaster, window frames, patched brick, and paint, as well as
plumbing repairs, demolition, and cleanup). Temporary barriers and
closures were erected during work in progress. The Court recognized
that each phase of the remodeling project, removed in time and
context, might be considered a repair item, but stated that "The
Code, however, does not envision the fragmentation of an over-all
project for deduction or capitalization purposes." The Court held
that the expenditures were not made for incidental repairs but were
part of an overall plan of rehabilitation, restoration, and
improvement of the building.
N. The Parties' Arguments
Petitioner contends that the costs of removing the asbestos-
containing materials are deductible as ordinary and necessary
business expenses because: (1) The asbestos removal constitutes
"repairs"7 within the meaning of section 1.162-4, Income Tax Regs.;
(2) the asbestos removal did not increase the value of the Douglas
Street building when compared to its value before it was known to
contain a hazardous substance--a hazard was essentially removed and
the building's value was restored to the value existing prior to the
discovery of the concealed hazard;8 (3) although performed
7 Petitioner states in its opening brief that "The law
recognizes that removing an unsafe condition is a repair rather
than an improvement", citing Schmid v. Commissioner, 10 B.T.A.
1152 (1928).
8 Petitioner introduced the reports and testimony of two
expert witnesses concerning the impact of the asbestos removal
(continued...)
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