(a) In general. A taxpayer may deduct amounts paid for repairs and maintenance to tangible property if the amounts paid are not otherwise required to be capitalized. Optionally, § 1.263(a)-3(n) provides an election to capitalize amounts paid for repair and maintenance consistent with the taxpayer's books and records.
(b) Accounting method changes. A change to comply with this section is a change in method of accounting to which the provisions of sections 446 and 481 and the accompanying regulations apply. A taxpayer seeking to change to a method of accounting permitted in this section must secure the consent of the Commissioner in accordance with § 1.446-1(e) and follow the administrative procedures issued under § 1.446-1(e)(3)(ii) for obtaining the Commissioner's consent to change its accounting method.
(c) Effective/applicability date—(1) In general. This section applies to taxable years beginning on or after January 1, 2014. Except as provided in paragraphs (c)(2) and (c)(3) of this section, § 1.162-4 as contained in 26 CFR part 1 edition revised as of April 1, 2011, applies to taxable years beginning before January 1, 2014.
(2) Early application of this section. A taxpayer may choose to apply this section to taxable years beginning on or after January 1, 2012.
(3) Optional application of TD 9564. A taxpayer may choose to apply § 1.162-4T as contained in TD 9564 (76 FR 81060), December 27, 2011, to taxable years beginning on or after January 1, 2012, and before January 1, 2014.
[T.D. 9636, 78 FR 57705, Sept. 19, 2013, as amended at 79 FR 42191, July 21, 2014]
Notes of Decisions
FPL Grp., Inc. v. Comm'r, 115 T.C. 554 (Tax Ct. 2000).
· cites it 6× “Petitioner argues that its method of accounting was to deduct expenditures to the extent allowed under section 1.”
Wolfsen Land & Cattle Co. v. Comm'r, 72 T.C. 1 (Tax Ct. 1979).
· cites it 4× “Section 162 reads in relevant part: (a) In General. -- There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business * * * Section 1.”
Plainfield-Union Water Co. v. Comm'r, 39 T.C. 333 (Tax Ct. 1962).
· cites it 4× “162-4, Income Tax Regs. If the repair does not " materially add to the value of the property nor appreciably prolong its life," it may be deducted as an expense.”
Richard L. Smith Vanalco, Inc. v. Comm'r of Internal Revenue, 300 F.3d 1023 (9th Cir. 2002).
· cites it 2× “26 C.F.R. § 1.162-4 . 9 A. Cell Relining Expenses The tax court held that “replacing the cell linings cannot be classified as an incidental repair, and the cost must therefore be capitalized.”
All-Steel Equip., Inc. v. Comm'r, 54 T.C. 1749 (Tax Ct. 1970).
· cites it 4× “Repairs 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, provided the cost of acquisition or production or the…”
Haeder v. Comm'r, 2001 T.C. Memo. 7 (Tax Ct. 2001).
· cites it 2× “Expenditures paid or incurred for regular maintenance to keep property used in a trade or business in an ordinarily efficient operating condition are currently deductible. See Plainfield-Union Water Co. v. Commissioner, 39 T.”
Pac. Fruit Express Co. v. Comm'r, 60 T.C. 640 (Tax Ct. 1973).
· cites it 10× “It further contends that since it met the reserve ratio test of the revenue procedure, it is entitled to deduct all its expenditures for the maintenance or repair of such cars and that no portion of such expenditures must be treated as capital expenditures solely on the ground…”
Honigman v. Comm'r, 55 T.C. 1067 (Tax Ct. 1971).
· cites it 4× “Respondent contends the expenditures are nondeductible capital expenditures because they arrested deterioration and constituted permanent betterment and improvements.”
Polyak v. Comm'r, 94 T.C. 337 (Tax Ct. 1990).
· cites it 2× “Repairs in the nature of replacements, to the extent that they arrest *348 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…”
LaPoint v. Comm'r, 94 T.C. 733 (Tax Ct. 1990).
· cites it 2× “Expenses for incidental repairs or maintenance are currently deductible (and are not capital expenditures) if they neither materially add to the value of the property nor appreciably prolong the property's useful life.”
Mazzocchi Bus Co. v. Comm'r, 65 T.C.M. 1858 (Tax Ct. 1993).
· cites it 2× “Section 162 provides that there shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or business.”
Annotations are extracted automatically from the opinions in the
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