- 32 -
was replaced, and a new roof drain was added to the structure of
the building. Lakeview's old roof was beyond repair because of a
flaw in its design for drainage. The replacement roof is
expected to last 20 years. As opposed to the roof at issue in
Oberman Manufacturing Co., the replacement of petitioner's roof
prolonged its useful life. The cost of the new roof is a capital
expense. Ritter v. Commissioner, 163 F.2d 1019 (6th Cir. 1947);
Georgia Car & Locomotive Co., 2 B.T.A. 986, 990 (1925); Ettig v.
Commissioner, T.C. Memo. 1988-182; see also Badger Pipe Line Co.
v. Commissioner, T.C. Memo. 1997-457; Drozda v. Commissioner,
T.C. Memo. 1984-19.
5. Computer
Respondent asserted in his trial memorandum and on brief
that petitioner is not entitled to a deduction taken with respect
to computer equipment in the amount of $723. (Although
respondent uses the figure of $773 in his brief, based on the
entire record the correct figure appears to be $723.) Since
petitioner has not addressed this issue, he is deemed to have
conceded it. See Rules 149(b), 142(a).
6. Accuracy-Related Penalty
In the Notice of Deficiency, respondent determined that
petitioner is liable for an addition to tax for a substantial
understatement of income tax under section 6662(b)(2).12
12 On brief respondent argues that petitioner is also
subject to a penalty for negligence or disregard of the rules or
regulations under sec. 6662(b)(1), but there was no determination
to this effect in the Notice of Deficiency or assertion in the
answer. Respondent has not moved to amend the pleadings. In any
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