Thanks for the positive rating
The definition of rehabilitation falls under the general plan of rehabilitation doctrine. The general plan of rehabilitation doctrine provides that expenses incurred as part of a plan of general rehabilitation must be capitalized even though the same expenses incurred separately would be deductible as ordinary and necessary repairs. The emerging general standard after INDOPCO for current deduction
of an expenditure with future benefits, the case with most repair/improvement expenditures, is a balancing test: Whether the taxpayer's administrative and record keeping costs associated with capitalization outweigh the potential distortion of income from a current deduction of the future benefit expenditures. "Rough justice" rules for current deduction of future benefits expenditures, reflecting that balancing standard, include whether (1) the expenditure is relatively small or the future benefit is "incidental" to the current benefit, (2) the expenditures are regularly recurring, (3) future benefits are short-term or variable, and (4) the burdens of capitalization outweigh in general the revenue benefits to the Treasury from capitalization of the expenditure; for example, where the cost once capitalized may not be depreciated or depreciated only over a period longer than the expected future benefit (slow or no depreciation). The Service and courts often have incorrectly relied on the general plan of rehabilitation to capitalize post-INDOPCO repair or improvement costs, where one of these rough justice exceptions to capitalization should have been used.
I have to logg off for now, but I will be back on later on this afternoon. You can reach out to me directly, but if you require immediate assistance, the other experts on this site are very helpful and knowledgeable as well. Thanks for your business. Regards Dave