Pryor v. Commissioner

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*185 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.

*186 Decision will be entered for the Respondent.