Capitalization vs. Expense.
Rentals R Us incurs the following expenditures on an apartment building it owns:
Replace the roof $25,000
Repaint the exterior 7,000
Install new locks 1,500
Replace broken windows 1,200
Replace crumbling sidewalks and stairs 7,000
Discuss the proper tax treatment for these expenditures.
First, the general rule with respect to capitalization of items: if the expenditure extends the life or increases the value of the property, then it is a capital expense.
Replace the roof is a capital expenditure because it extends the ...
The 164 word solution provides a sentence of explanation for eachof the items for an apartment building.