ch 6 prob # 35 prentice halls federal taxation 2016 individuals Capitalization v

Question

ch 6 prob # 35 prentice halls federal taxation 2016 individuals

Capitalization vs. Expense. Sam owns a small apartment building (this is the only rental building Sam owns). During the year Sam incurs the following expenditures: ItemAmount Replace roof and roof underlying structure because of building code requirements$30,000Repaint the interior3,000Repair door handles and door locks1,000Replace broken windows1,500Replace crumbling sidewalks and stairs because of building code requirements25,000Discuss the proper tax treatment for these expenditures.

Explanation / Answer

1)Replacing of roof is a capital exepdniture 2) Repaint of inteior is revenue expense 3)Repair of door handles in revenue expense 4) Replacing of broken windows in revenue expense 5) repalce crumbing sidewalks is captial expenditure All of the revenue expenses will be applicable for tax.

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