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repairs on the roof.” The work done on the rental house by the
contractors also included interior repairs and drywall
installation, the cost of which respondent has conceded.
The contractors removed the existing top layers of the roof
and recovered it with fiberglass sheets and hot asphalt. They
made no structural changes to the roof. The $8,000 cost of
removing and replacing the roof-covering material on the roof of
the rental house is the amount in issue. Petitioner claims it is
a deductible expense; respondent argues it is a capital expense.
Section 162 provides for the deduction of all ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on a trade or business. See sec. 62(a)(4). The costs
of incidental repairs to property are deductible if those repairs
neither materially add to the value of the property nor
appreciably prolong the life of the property. Sec. 1.162-4,
Income Tax Regs. Repairs in the nature of replacements, to the
extent that they arrest deterioration and appreciably prolong the
life of the property, must generally be capitalized and
depreciated in accordance with section 167. Id. Further,
section 263(a) provides that no deduction shall be allowed for
permanent improvements or betterments made to increase the value
of any property.
The issue in this case has been considered previously by
this Court in Oberman Manufacturing Co. v. Commissioner, 47 T.C.
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Last modified: May 25, 2011