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accord with generally accepted accounting principles and was
verified by petitioners’ outside accountants as properly
representing petitioners’ income for financial reporting
purposes.
Petitioners believed that their financial accounting method
was not permitted under the Internal Revenue Code for the tax
years under consideration. Accordingly, for Federal income tax
purposes, petitioners deducted the costs associated with the
procedures involved in the taxable year in which they are
incurred.
Respondent’s determination was to capitalize the costs and
depreciate them over the 10-year recovery period beginning with
the date the costs are incurred.
OPINION
The issue we consider is whether petitioners’ expenditures
for the described procedures were expenses deductible under
section 162(a) or whether they should have been capitalized under
section 263(a). Expenses incurred for regular maintenance to
keep property in an ordinarily efficient operating condition are
currently deductible. Section 1.162-4, Income Tax Regs.,
provides:
The cost of incidental repairs which neither
materially add to the value of the property
nor appreciably prolong its life, but keep it
in an ordinarily efficient operating
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