Expense or capitalize roof repairs?
Today, the cost of roof repairs on an average building can be six figures--and the Service will always scrutinize such a deduction. The issue of whether to capitalize or expense a roof repair has been the subject of much tax litigation over the years; unfortunately, it has not resulted in any full-proof test to determine whether to deduct or capitalize. Instead, taxpayers must determine this on a case-by-case basis. Thus, to deduct the costs of repairing a roof, taxpayers have to understand thoroughly the various standards for current deductibility and to document properly their facts.
The initial standard for deductibility is found in Sec. 162(a), whic