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business and allowed Holland America to display and promote its
products to the public. Respondent contends the majority of the
landscaping was done to improve the grounds surrounding Mr. and
Mrs. Dobbe’s residence, including the front, side, and back yards
and the area near the outdoor swimming pool; therefore, the
improvements made to property owned by Mr. and Mrs. Dobbe
primarily benefited Mr. and Mrs. Dobbe personally and are not
deductible as a business expense.3
Under appropriate circumstances, landscaping expenses may be
deductible when the expenses legitimately are connected to the
taxpayer’s trade or business and the requirements for
deductibility otherwise are met. See Hefti v. Commissioner, T.C.
Memo. 1988-22, affd. 894 F.2d 1340 (8th Cir. 1989); Rhoads v.
Commissioner, T.C. Memo. 1987-335. When, however, a corporation
makes an expenditure that primarily benefits the corporation’s
3In the notice of deficiency, respondent determined, in the
alternative, that, if any of the landscaping costs are ordinary
and necessary business expenses, the expense is a capital
expenditure that is not deductible but is subject to depreciation
under the MACRS guidelines with a 15-year recovery period. See
Alabama-Ga. Syrup Co. v. Commissioner, 36 T.C. 747 (1961), revd.
on other grounds sub nom. Whitfield v. Commissioner, 311 F.2d 640
(5th Cir. 1962). The record does not contain any evidence as to
the useful lives of the various installations, nor does the
record disclose how Holland America had any depreciable interest
in the landscaping. Holland America did not own the property on
which the landscaping was installed, nor did it have a leasehold
interest covering that part of the property. We need not decide,
however, whether the landscaping expense must be capitalized
because of our holding, infra, that the landscaping was not an
ordinary and necessary business expense.
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