Final answer:
The statement is true; costs for new buildings or improvements that enhance property value are not deductible; they must be capitalized and recovered over time through depreciation or amortization.
Step-by-step explanation:
The statement that a deduction is not allowed for amounts paid for new buildings or for permanent improvements or betterments that increase the value of any property is true. In general, the costs associated with capital expenditures such as new buildings, extensions, or enhancements that add value to a property must be capitalized rather than deducted. This means that the costs cannot be deducted in the year that they are incurred but must be recovered over time through processes such as depreciation or amortization, depending on the nature of the improvement and applicable tax laws. Immediate deductions in the year of expenditure are typically reserved for expenses considered to be ordinary and necessary for the operation of a business, such as routine repairs and maintenance that do not add significant value to an asset.