Bernardus A. P. Dobbe and Klazina W. Dobbe - Page 18




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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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