- 3 - coming through, almost like a river.” Twenty eight sheets of plywood on the roof were replaced due to dry rot. The superintendent explained that it was not necessary to remove the tar and gravel from the roof. However, Armstrong’s company policy was to remove all tar and gravel down to the plywood roof, spray the primer on, and top it off with a spray polyurethane foam coating. There were no structural changes made to the roof. The entire roof was sprayed to protect Armstrong against any potential liability in the future. The leaks were located under the rooftop air conditioning unit. In order to gain access to that area and stop the leaks, petitioner’s contractors had to move and replace the air conditioner with a crane, place supports under the air conditioner when it was replaced, disconnect and reconnect the gas lines, and install new electrical conduits. Respondent disallowed a repair expense deduction of $52,880, allowed a $656 depreciation deduction, and made an automatic adjustment. Respondent determined that $3,572 of the $52,880 had not been substantiated and that the remaining $49,308 was a capital expenditure. At trial, petitioner did not address the substantiation issue, and on brief petitioner conceded this issue. Petitioner claims that the roof-covering expense incurred is a deductible expense; respondent argues that it is a capitalPage: Previous 1 2 3 4 5 6 Next
Last modified: May 25, 2011