- 19 - useful life substantially beyond the taxable year is a capital expenditure. Sec. 1.263(a)-2(a), Income Tax Regs. Petitioners are therefore not entitled to a deduction for payments to Levi Moore. Petitioners have not raised--and we do not address-- whether Dr. Rinker is entitled to capitalize and depreciate the cost of the improvements made by Levi Moore. Petitioners also argue that payments to the computer technician were deductible repair expenses. Under section 1.162- 4, Income Tax Regs., 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 either be capitalized and depreciated in accordance with section 167 or charged against the depreciation reserve if such an account is kept. Petitioners have not provided the Court with sufficient evidence to determine whether the work done by the technician should be deducted as a current expense or capitalized into the cost of Dr. Rinker’s office computer and depreciated. Therefore, petitioners are not entitled to a deduction for the technician’s fees. See Rule 142(a). Petitioners have not raised the issue of whether they are entitled to a deduction for depreciation or amortization with respect to the equipment. We therefore do not address it.Page: Previous 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Next
Last modified: May 25, 2011