An Administrative Law Judge has sustained for New York State personal income tax purposes a real property owner’s treatment of a payment in settlement of litigation as a capital expenditure under Internal Revenue Code § 263, causing it to be includable in the owner’s basis when calculating his gain from the sale of the real property, because the settlement payment was made in order to remove a claim on the real property. Matter of Joseph Jeffries-El, DTA No. 826103 (N.Y.S. Div. of Tax App., Dec. 10, 2015). The ALJ also held that the property owner’s payment of mortgage interest and repayment of monetary advances were allowable as deductible business expenses because such expenses were “ordinary and necessary” expenses incurred in the property owner’s business of property development. The Department had argued that the payments were neither bona fide capital expenditures nor deductible business expenses.