Dennis W. Stark - Page 32



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          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           
                                                             (continued...)           

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