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determination that repairs to petitioner’s truck, necessitated by
an accident in 1994, must be capitalized.
Expenses incurred to maintain property used in a trade or
business in efficient operating condition ordinarily are
deductible. See sec. 162(a); Jacks v. Commissioner, T.C. Memo.
1988-237; Gilles Frozen Custard, Inc. v. Commissioner, T.C. Memo.
1970-73. Likewise, the cost of repairs “which neither materially
add to the value of the property nor appreciably prolong its
life, but keep it in an ordinarily efficient operating condition,
may be deducted as an expense”. Sec. 1.162-4, Income Tax Regs.;
see also sec. 1.263(a)-1(b), Income Tax Regs. (“Amounts paid or
incurred for incidental repairs and maintenance of property are
not capital expenditures”).
Although it is not always easy to delineate when an
expenditure is a deductible repair or a capital expenditure that
permanently improves property and increases its value, see
section 263, the standard that we must use to evaluate a
particular expenditure is well established. In Plainfield-Union
Water Co. v. Commissioner, 39 T.C. 333, 337 (1962), we described
the standard as follows:
An expenditure which returns property to the state it
was in before the situation prompting the expenditure
arose, and which does not make the relevant property
more valuable, more useful, or longer-lived, is usually
deemed a deductible repair. A capital expenditure is
generally considered to be a more permanent increment
in the longevity, utility, or worth of the property.
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