- 16 -
Whether an expenditure may be deducted or must be
capitalized is a question of fact. See INDOPCO, Inc. v.
Commissioner, supra at 86; Norwest Corp. & Subs. v. Commissioner,
supra at 280; Plainfield-Union Water Co. v. Commissioner, supra
at 337-338. The Supreme Court has recognized that
the "decisive distinctions" between current expenses
and capital expenditures "are those of degree and not
of kind," and that because each case "turns on its
special facts" the cases sometimes appear difficult to
harmonize. [INDOPCO, Inc. v. Commissioner, supra at
86; citations omitted.]
Thus, "Courts have adopted a practical case-by-case approach
in applying the principles of capitalization and deductibility."
Norwest Corp. & Subs. v. Commissioner, supra at 280 (quoting
Wolfsen Land & Cattle Co. v. Commissioner, supra at 14).
Accordingly, we shall not attempt to harmonize the decided cases;
"Rather, we shall discuss the facts as reflected in the record
before us and arrive at a conclusion, recognizing that we shall
be engaging in an exercise in line drawing". Badger Pipe Line
Co. v. Commissioner, T.C. Memo. 1997-457.
Replacement of the Cell Linings
The parties agree on brief that the cell lining performs a
function that is vital and integral to the smelting process. The
cell lining acts as the cathode, and without the passage of
electricity from the anode to the cathode, there would be no
electrolytic production of aluminum. Furthermore, the cell will
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