## Facts

- Kansas City, Missouri enacted an ordinance creating a benefit district and financing off-street parking facilities through special assessments against property in the district.
- Joseph H. Brecklein owned income-producing rental property in the district (some individually and some as trustee) and received special tax bills totaling over $19,000.
- The tax bills permitted payment either (1) in a lump sum without interest or (2) in installments with interest.
- On January 15, 1957, Brecklein paid the assessments in a lump sum.
- The Breckleins’ 1957 federal income tax return did not claim a current deduction for the special-assessment payment on Brecklein’s individually owned property.
- Brecklein later learned the IRS had issued favorable private letter rulings to other taxpayers allowing deductions for similar parking-improvement assessments (a 1958 ruling involving Bismarck, North Dakota, and a 1959 ruling for Kansas City’s Wirthman Building partnership), both later revoked prospectively.
- In 1961, Brecklein sought a 1957 refund, asserting that denial of his deduction was unfair and discriminatory given the IRS’s earlier treatment of similarly situated taxpayers.

## Issues

1. Whether a lump-sum payment of special assessments for off-street parking facilities was currently deductible as an ordinary and necessary business expense or was a non-deductible capital expenditure.
2. Whether favorable IRS private letter rulings issued to other taxpayers required the government to allow the same deduction to Brecklein for 1957 on theories of discrimination, estoppel, or equal-treatment principles.

## Decision

- The Eighth Circuit reversed the district court’s refund judgment and held the taxpayers were not entitled to a 1957 refund.
- The court concluded the special-assessment payment was capital in character and not currently deductible as a business expense.
- The court held that prior favorable private letter rulings to other taxpayers did not create a legal right for non-addressees to receive the same treatment, even if the earlier rulings were inconsistent with the correct statutory interpretation.

## Legal Principles

- Special assessments for local improvements that provide enduring benefits to income-producing property are generally capital expenditures, not ordinary and necessary business expenses deductible in the year paid.
- IRS private letter rulings are individualized administrative determinations that do not have general legal force and do not bind the government with respect to non-addressees.
- The government is not required to repeat or extend an earlier legal error to other taxpayers; correcting mistaken administrative positions (including through prospective revocation) does not, by itself, establish unlawful discrimination or a right to “equal treatment in error.”

## Conclusion

The court denied a refund because the parking-improvement assessments were capital expenditures and because the IRS’s earlier, erroneous private letter rulings to other taxpayers did not obligate the government to allow the same deduction to Brecklein.


Bookwalter v. Brecklein, 357 F.2d 78 (8th Cir. 1966)