Otis v. Commissioner
United States Tax Court
Petitioners had depreciated the cost of carpets, draperies, dishwashers, a refrigerator, and an air conditioner. In 1974 and 1975, petitioners treated the cost of replacing these items as a business expense under sec. 162, I.R.C. 1954. Held, the replacement costs were capital expenditures within the meaning of sec. 263(a)(2) and depreciable in accordance with sec. 167. Held, further, sec. 6653(a) penalty not applicable.
1Opinion of the Court
Sterrett, Judge:
In a notice of deficiency dated March 28, 1978, respondent determined a deficiency in petitioners’ income taxes for the taxable years 1974 and 1975 in the amounts of $2,154.36 and $665.27, respectively. Respondent has also determined additions to tax pursuant to section 6653(a), I.R.C. 1954, in the amounts of $107.72 for 1974 and $33.26 for 1975.
The primary issue before the Court is whether expenditures incurred by the petitioners in replacing certain items in their rental properties were for deductible repairs which were ordinary and necessary in the conduct of their business…
2Cases cited3 opinions
- Commissioner v. South Texas Lumber Co.Supreme Court of the United States · 1948
- Wolfsen Land & Cattle Co. v. CommissionerUnited States Tax Court · 1979
- Pierce Ditching Co. v. CommissionerUnited States Tax Court · 1979
3Cited by44 opinions
- Seligman v. CommissionerUnited States Tax Court · 1985
- Horstmier v. CommissionerUnited States Tax Court · 1983
- Morrison v. CommissionerUnited States Tax Court · 1987
- Estate of McLendon v. CommissionerUnited States Tax Court · 1993
- Webbe v. CommissionerUnited States Tax Court · 1987
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