Pryor v. Commissioner

1954 T.C. Memo. 60, 13 T.C.M. 519, 1954 Tax Ct. Memo LEXIS 184

• Court: United States Tax Court
• Decided: June 11, 1954
• Docket: Docket No. 25778.
• Status: Unpublished

Opinion

Amos A. Pryor and Wife, Lockey Pryor v. Commissioner.

Pryor v. Commissioner

Docket No. 25778.

United States Tax Court

T.C. Memo 1954-60; 1954 Tax Ct. Memo LEXIS 184; 13 T.C.M. (CCH) 519; T.C.M. (RIA) 54166;

June 11, 1954, Filed

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Held, cost of repairing and improving house so that a portion of it might be rented is a capital expenditure and is not deductible under section 23(a)(1)(A), I.R.C.

Lloyd G. Shell, Esq., for the petitioners. Frederick T. Carney, Esq., for the respondent.

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BRUCE

Memorandum Findings of Fact and Opinion

BRUCE, Judge: Respondent has determined a deficiency in petitioners' income tax for the year 1947 in the amount of $154.70.

Amos A. Pryor and Lockey Pryor, petitioners, are husband and wife and resided during 1947 at 1507 McCalla Avenue, Knoxville, Tennessee. They filed their joint income tax return for the year 1947 with the collector of internal revenue for the district of Tennessee.

Petitioners purchased the residence located at the above address in the latter part of 1946 for $4,500. They planned to live in one side and to rent the other. The building had been built around 1900 and was in a bad state of repair. Before allowing petitioners to rent a portion of the dwelling, the OPA required them to make certain repairs and improvements. Petitioners expended $502.81 for repairs to the entire dwelling. The repairs consisted of the plastering of two rooms, some patchwork, painting the outside of the house, and repairing the windows. Petitioners also expended $176.63 in wiring and installing a hot water heater. A portion of the house was rented during five months of 1947 at $25 per month for a total rental of $125.

Petitioners deducted the cost of the above repairs and improvements totaling $679.44 in their income tax return for 1947 and respondent disallowed the deduction. We sustain respondent's determination as the expenditures were pursuant to a general plan of reconditioning, improving, and altering the property, and hence were capital expenditures. Ethyl M. Cox, 17 T.C. 1287. The repairs and improvements were made to adapt the house so that a portion of it might be rented and to make the house livable for petitioners. Also, an undisclosed portion of the repairs were made upon property used as petitioners personal residence and are clearly not deductible under section 23(a)(1)(A), Internal Revenue Code. ¹Claudian B. Northrop, 17 B.T.A. 950.

Decision will be entered for the Respondent.

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Footnotes

• 1. SEC. 23. DEDUCTIONS FROM GROSS INCOME.

  In computing net income there shall be allowed as deductions:

  (a) Expenses. -

  (1) Trade or business expenses. -

  (A) In general. - All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including a reasonable allowance for salaries or other compensation for personal services actually rendered; traveling expenses (including the entire amount expended for meals and lodging) while away from home in the pursuit of a trade or business; and rentals or other payments required to be made as a condition to the continued use or possession, for purposes of the trade or business, of property to which the taxpayer has not taken or is not taking title or in which he has no equity. * * *