Court Opinion

ID: 4487308
Source: CourtListenerOpinion
Date Created: 2020-01-17 22:00:41.57693+00
Date Added: 2024-06-11T14:54:08.243568
License: Public Domain

*401OPINION.
Graupner :
The taxpayer asserts error on the part of the Commissioner in disallowing the deductions sought in the amount of $4,000. He contends that such deductions are proper under section 214(a) (1) of the Revenue Act of 1918. The Commissioner relies upon section 215(c) of the same act to support his action.
The taxpayer’s contention stands or falls upon the determination as to whether the expenditures were “ ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business” as described in section 214(a) (1). There is no assertion that the house was used by him for the purpose of carrying on his professional practice or for any other purposes than that of residence. The fact that the property was rented from August 1, 1917, to November 1, 1920, forms the sole foundation of his claim. The house was built in 1910, and it may be safely assumed that it was stuccoed on the exterior and painted on the interior at that time. There is no evidence to show any stucco, painting, or *402decorative work from that date until 1920, and the stipulation of facts before us contains the admission that “ no painting or decorating had been done to the interior of the house during Boyd’s tenancy or for a number of years.” We therefore can not assume that any repair work of the character described had been done from the date of completion of the house until after August 1, 1920, when it was known that Boyd was going to move out and the taxpayer desired possession for his own residential use.
With this situation before us, can we consider that the replacement of the stucco and the repainting and redecorating of the interior were ordinary and necessary expenses paid in carrying on the trade or business of renting houses or a house? The wear and tear had extended over a period of probably ten years, during most of which time the taxpayer was in possession, and in only three of which years the property was leased for income purposes. At the time the restoration work was decided upon and begun, the taxpayer had no intention of renting the property for any further period and was doing the work for his own use.
Deterioration of property, such as is described in the facts before us, is a gradual process. While the stucco may have fallen off in one year, the course of its disintegration ran from year to year from the date that it was put on the house. We know that the taxpayer had taken allowance for wear and tear amounting to $1,100 for at least two years, and the record is silent on whether he took it for the preceding year. The conceded amount of deductions paid and allowed is, from the facts before us, the probable reasonable pro rata for wear and tear for the two years involved, and one of those years is the one in which the repairs considered in this appeal were made. We believe therefore that this appeal is governed by section 215 (c) of the Revenue Act of 1918, which prohibits deductions for “ any amount expended in restoring property or in making good the exhaustion thereof for which an allowance is or has been made.” Furthermore, it may well be said that, as the house was being restored for the personal residence purposes of the taxpayer, the expenditures were personal and not deductible under section 215(a). The amounts spent were properly capital or personal expenditures.