IRS Issues Safe Harbor Deduction for Restaurant Remodel or Refresh Projects

The IRS recently issued Revenue Procedure 2015-56, which gives operating retail or restaurant businesses a safe harbor method for deducting and capitalizing remodeling or refresh project costs on qualified buildings (owned or leased).

Effective for tax years beginning on or after January 1, 2014, this safe harbor method simplifies the previously issued Tangible Property Regulations by minimizing the need to perform a detailed factual analysis to determine whether costs incurred during a remodel-refresh project are repair and maintenance expenses, or capitalized improvements.  In addition, because the safe harbor method is applied to the entire building as a single unit of property, it also eliminates the need to apply these rules separately to each building structure and each building system.

Click here to learn more about the safe harbor deduction.