Duffy v. Central R. Co. of New Jersey
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268 U.S. 55 (1925)
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U.S. Supreme Court
Duffy v. Central R. Co. of New Jersey, 268 U.S. 55 (1925)
Duffy v. Central Railroad Company of New Jersey
Argued March 13, 16, 1925
Decided April 13, 1925
268 U.S. 55
1. Expenditures made by a corporate lessee, as required by the lease, to create additions to the leased property and not for upkeep, are not maintenance and operation expenses deductible from its gross income of the tax year in which made, within the meaning of § 12(a) Subd. "First" of the Revenue Act of 1916, but are betterments under Subd. "Second " of that section -- capital investment, subject to annual allowances for exhaustion or depreciation. P. 268 U. S. 62
2. Neither are such payments for betterments and additions, though made by the lessee pursuant to the lease, deductible under § 12(a), Subd. "First" as " rentals or other payments "required to be made as a condition to the continued use or possession of
property etc., since "rental" is there used in the usual sense implying a fixed sum, or property amounting thereto, payable at stated times for the use of property, and "other payments" means payments ejusdem generis with rentals, such as taxes, insurance, etc. P. 268 U. S. 63.
289 F. 354 reversed.
Certiorari to a judgment of the circuit court of appeals affirming a recovery in the district court of money paid under protest as income tax.