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petitioner does not have COD income in the amount of $111,229 for
1995.
III. Shopping Center Roofs
A. Cirby/Sunrise Shopping Center Roof
Respondent argues that the cost of replacing the roof on the
Cirby/Sunrise shopping center must be capitalized. Respondent
contends that “An entire component of the building--the roof--was
removed and replaced”. Respondent further argues that the new
roof prolonged the life of the property. Petitioner argues that
the work on the roof was of the nature of a repair for the
purpose of keeping the roof in “ordinary operating condition”.
Petitioner argues that, because the work on the roof was repairs,
the cost could be deducted in the year paid.
Section 162 allows the deduction of “all the ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on any trade or business”. Section 1.162-4, Income Tax
Regs., further 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 condition, may be deducted as an
expense * * *. Repairs in the nature of replacements,
to the extent that they arrest deterioration and
appreciably prolong the life of the property, shall
* * * be capitalized * * *.
Section 263(a) provides that no deduction shall be allowed
for (1) “Any amount paid out for new buildings or for permanent
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