Instead, under threat of litigation, the petitioner corrected the problem a year later, and sought to deduct the cost as an ordinary and necessary business expense, or a loss. Focusing on the fact that there was no sudden, unforeseeable or catastrophic factor that caused the construction, the court held that this was not an ordinary business expense or a deductible loss. Additionally, the court reasoned that until the drainage system installed, the construction of the theatre incomplete, and thus the petitioners capital investment incomplete.
