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concurrently, the asbestos removal and remodeling were not part of
a general plan of rehabilitation because they were separate and
distinct projects, conceived of independently, undertaken for
different purposes, and performed by separate contractors; and (4)
using the principles of section 213 (which allows individuals to
deduct certain personal medical expenses that are capital in nature)
and section 1.162-10, Income Tax Regs. (which allows a trade or
business to deduct medical expenses paid to employees on account of
sickness), the cost of removing a health hazard is deductible under
section 162.9
Respondent, on the other hand, contends that the costs of
removing the asbestos-containing materials must be capitalized
because: (1) The removal was neither incidental nor a repair;10 (2)
8(...continued)
costs on the value of the Douglas Street building. These experts
opined that the discovery of asbestos as a health hazard in
combination with the extent of asbestos present in the building
resulted in an immediate diminution in the value of the building.
(One of the experts testified that the building would be
appraised as if it did not contain asbestos, and then the amount
it would cost to repair the condition would be deducted from the
appraisal.) The expert testimony supports petitioner's argument
that the asbestos removal merely restored the original value of
the building (i.e., without hazardous fireproofing) but did not
enhance its value.
9 Petitioner also relies on Rev. Rul. 79-66, 1979-1 C.B.
114, which allows, under limited circumstances, a sec. 213
deduction for an individual taxpayer's costs of removing and
covering lead-based paint in a personal residence, to the extent
the costs exceed the increase in the residence's value.
10 Respondent contends that petitioner's reliance on
Schmid v. Commissioner, supra, is misplaced. The Board of Tax
(continued...)
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