THE TAXPAYER PURCHASED LAND TO BUILD A STORAGE BUILDING. AFTER PURCHASING THE PROPERTY, THE COMPANY DISCOVERED THAT IT WAS REQUIRED TO SPEND A SUBSTANTIAL AMOUNT TO PREVENT DRAINAGE DAMAGE TO THE NEIGHBORING PROPERT.

THE COMPANY MUST ADD THE ADDITIONAL COST TO THE BASIS IN THE LAND

THE COST CAN BE RECOVERED THROUGH DEPRECIATION OF THE LAND

THE COST IS DEDUCTIBLE BECAUSE IT WAS UNEXPECTED AT THE TIME OF PURCHASE

AT THE TIME THE COMPANY PURCHASED THE PROPERTY IT WAS UNAWARE OF THE NEED FOR ADDITIONAL EXPENDITURES, THEREFORE THE COSTS CAN BE DEDUCTED AS A LOSS