- 5 - chargeable to capital. The cost of improvements and betterments made to a taxpayer’s property are among the items properly chargeable to capital. Sec. 1.1016-2(a), Income Tax Regs. Renovations to a property and legal fees paid in defense of title have long been accepted as capital expenditures. Woodward v. Commissioner, 397 U.S. 572 (1970); LaPoint v. Commissioner, 94 T.C. 733 (1990). A taxpayer is required to keep permanent books of account or records that are sufficient to establish the amount of gross income, deductions, and other information required to be shown on an income tax return. Sec. 6001; sec. 1.6001-1(a), Income Tax Regs. The Commissioner’s determination is presumed correct; the burden is on the taxpayer to substantiate any basis increase beyond what is determined by the Commissioner. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933); Knauss v. Commissioner, T.C. Memo. 2005-6; see supra note 4. Petitioners reported the following amounts as capital expenditures which increased petitioners’ basis in the residence:Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011